The October 31 Trust Deadline: The Who, What, When and Why | Ed Slott and Company, LLC

The October 31 Trust Deadline: The Who, What, When and Why

By Beverly DeVeny, IRA Technical Expert
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@BevIRAEdSlott

Tax returns are all filed. Roth recharacterizations are all done. Excess contributions have been removed. All of this had to be done by October 15. There is still one more IRA deadline to meet for this month.

When is the deadline? It must be met by October 31. It applies to:

  1. IRAs with a trust as the beneficiary
  2. The IRA owner died in 2013

What has to be done? A copy of the trust or a list of the beneficiaries and their entitlements must be provided to the IRA custodian.

Who has to do this? That would be the trustee of the trust. Not the attorney, the financial advisor, the CPA or any other professional who might have worked on the estate plan. The trustee of the trust - who is often a family member and would have no clue about this requirement.

Why is this important? Most individuals who name a trust as the beneficiary of their IRA do so with the understanding that the required distributions from the IRA will continue to be made to the trust using the age of the oldest trust beneficiary. This will NOT happen unless the October 31deadline is met.

What happens if the deadline is missed? The trust is a non-qualifying trust and there is no designated beneficiary for the IRA. If the IRA owner died before reaching his required beginning date (April 1 of the year after attaining age 70 ½), then the IRA must pay out to the trust within five years. If the IRA owner died after his required beginning date, then distributions to the trust will be made using the owner’s remaining life expectancy, not the age of the oldest trust beneficiary.

 

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