Don’t Lose The Beneficiary Bet article February 27 2022
Read your article in the Chicago Tribune on naming beneficiaries of IRAs and etc. Excellent as always.
What is your opinion on naming your living trust as contingent beneficiary after your spouse on an IRA? Is there any tax deferral available to those beneficiaries of the trust?
Terry Says
That depends on whether your trust qualifies as a ‘see-through” or “look-through” trust. If the trust has an individual as beneficiary, it is considered “look-through” and then you get the 10 year rule for distributions. But if the beneficiary of your RLT is a charity, for example, the rules are different.
And a lot depends on whether you had started taking RMDs. If you hadn’t taken RMDs a non-look-through trust as beneficiary has only 5 years to distribute the assets. If RMDs had started, the RMDs can be taken over the owner’s remaining single life expectancy.
If you’re going to name your RLT as contingent beneficiary, it will get the 10 year treatment for withdrawals as long as a person is named as beneficiary of your RLT! For specific help, go to www.IRAHelp.com and sign up with one of Ed Slott’s experts to make sure your estate plan is correctly drawn before you name your RLT as contingent beneficiary.
