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Financial Planning / Tax Strategies
|Subject: Re: RMD before death?||Date: 10/14/2013 10:12 AM|
|Author: Wradical||Number: 119307 of 121255|
The problem with having other than "natural persons" names as IRA beneficiaries is that the entire account must be distributed within 5 years after death of the owner."
I dislike questioning one of the resident pros, but I do not think that this is accurate. I believe that the "stretch" provsiions are stillavailableif the trust is a "qualified trust".
You are correct. The requirements for a trust to function as a beneficiary (I don't think the regs. use the term "qualified trust" for this provision) are described in Regs. 1.401-(a)(9)-4, which is a series of Q&As.
And the more plain-English translation is found in IRS Pub 590, on page 36.
While the rule does remain that a beneficiary must be a natural person, these provisions allow for a trust beneficiary to be treated as the beneficiary of the IRA. For multiple beneficiaries, you use the age of the oldest one. The separate share rule is not allowed.
The 5-year rule DOES apply to an estate.
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