TRUSTEED IRAs
01.Core Concepts
• When established, trusteed IRAs are structured to make pre-defined payments to beneficiaries. These amounts might be limited to: 1. The required minimum distribution, 2. The required minimum distribution plus additional amounts under an ascertainable standard for the benefit of the beneficiaries (generally for health, education, maintenance, or support), or 3. The greater of income or the required minimum distribution. • Under the rules for participant deaths after December 31, 2019 • Problematic for ineligible beneficiaries due to no distributions for nine years and large distribution in year 10 (when death is before RBD) • Could be useful for eligible beneficiaries, with the exception of minors as they become ineligible beneficiaries at age 21 SEE-THROUGH TRUST • RMD rules look through the trust to view the beneficiary as the retirement plan beneficiary, if the following rules are met: 1. The trust must be valid under state law. 2. The trust is irrevocable or will by its terms, become irrevocable upon the death of the participant or IRA owner. 3. The beneficiaries of the trust are identifiable. 4. A copy of the trust documents (or a list of beneficiaries and a description their terms of entitlement) must be provided to the qualified plan administrator by October 31 of the year immediately following the year in which the participant died.