Message Font: Serif | Sans-Serif
No. of Recommendations: 1
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".

REgards, JAFO

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.

Print the post  


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.
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.