You can make a trust as the beneficiary of your IRA, but it must be an irrevocable trust. It must also clearly list the beneficiaries of the trust, which will become the beneficiaries of your IRA. Without a designated beneficiary, the trustee must distribute the IRA using rules based on the final age of the IRA owner.
What is a designated beneficiary of an IRA?
Designated beneficiaries are individuals (human beings) who are named as beneficiaries, do not share the IRA or plan account with nonindividuals, and are named in a timely manner. Charities and/or your estate can be named as beneficiaries, but they are not designated beneficiaries.
Who is the designated beneficiary of a revocable trust?
If you name a revocable trust or any entity other than an individual as your IRA beneficiary, the trustee will not be able to determine the “designated beneficiary,” which is the oldest living beneficiary on September 30 of the year following that of the owner’s death.
Can a IRA be set up in a revocable trust?
You can set up a revocable trust to become irrevocable upon your death. If it also meets the other requirements for IRA trust beneficiaries, then the trustee can see through the trust to determine the designated beneficiary.
What makes a trust a designated beneficiary of an IRA?
In order for the Marital Trust to qualify as a “ Designated Beneficiary ” and therefore allow for stretching the withdrawals from the IRA over the surviving spouse’s life expectancy, the trust must meet the following tests: 1) it must be valid under state law; 2) the trust must become irrevocable before or upon the death of the IRA owner;
Can a spouse be the beneficiary of an IRA?
First, since a Marital Trust must require annually the distribution of all trust income to the spouse who is the beneficiary of the trust, the Marital Trust must state that with regard to any IRA, the income must be determined using the greater of
