Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
My stepdaughter's stepfather died in 2004 and among his assets was an IRA. The beneficiary of the IRA was a revocable trust that became irrevocable on his death. There are 3 beneficiaries of the trust. To avoid heavy taxes the custodian of the IRA split the IRA into 3 IRAs under direction from the trust (they did not do this until 2005). Now I believe each beneficiary must take a distribution this year, since he died last year, using the Table 1 Single Life Expectancy For Use by Beneficiaries.

The question is whether each beneficiary uses his/her age or the age of the oldest beneficiary. Since the trust was apparently a qualified trust, I think the trust can be the designated beneficiary but I'm not sure how the fact that the IRA was split into 3 affects the designated beneficiary rules. Pub 590 says "--the beneficiary with the shortest life expectancy will be the designated beneficiary if both of the following apply: 1/ all the beneficiaries are individuals and 2/the account or benefit has not been divided into separate accounts or shares for each beneficiary."

I'm hoping there's an expert out there but any and all thoughts will be appreciated.

Carole
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.