Naming a revocable trust as contingent beneficiary of a traditional IRA | Ed Slott and Company, LLC

Naming a revocable trust as contingent beneficiary of a traditional IRA

If someone names their revocable living trust as a contingent beneficiary, does the balance have to be withdrawn in 5 years?

If he/she wants the proceeds to go to the children after the second death, shouldn't he/she name the children as contingent beneficiaries so they can spread it out over 10 years? Thanks

  • The trust would only be subject to the 5 year rule if the decedent passed prior to their RBD AND the trust was not qualified for look through.
  • If the decedent passed on or after their RBD, the trust distribution period would be 10 years if the trust was qualified, or the remaining life expectancy of the decedent if not qualified.
  • If the trust was qualified AND the beneficiary of the trust was disabled or chronically ill, the trust could stretch distributions over the life expectancy of the disabled beneficiary until the death of the disabled beneficiary. 

  • Why would you run the IRA through a revocable trust?  If you want the children as the contingent beneficiaries, you should name the children as the contingent beneficiaries.  If you want to name trusts for the children as the contingent beneficiaries, you should name trusts for the children (whether under the Will or under a separate trust instrument) as the contingent beneficiaries.
  • Bruce Steiner
 

Find members of Ed Slott's Elite IRA Advisor GroupSM in your area.
We neither keep nor share your information entered on this form.
 

I agree to the terms and services:

You may review the terms and conditions here.