I wanted to revisit this topic. I am supposed to meet my father’s estate lawyer later this week for more clarity. Originally some people who participate in this community said that I could NOT take the RMDs from the Inherited IRA in my father’s Trust based on 10 years and the duration would have to be based upon the Life Expectancy of the oldest beneficiary which is my father’s 89 year old partner and that would mean that the IRA account needed to be emptied within 5.3 years. I have copied and pasted the section of my father’s Trust document related to IRAs. Does this change people’s views? Thanks!
Just a refresher on my situation:
My father, age 93 (birthdate 8/12/1931) died on 09/14/2024. His Trust has 4 equal 25% Beneficiaries:
(1) Me, age 68 who is the Trustee
(2) my sister, age 67
(3) my sister-in-law, age 63
(4) my father’s partner of 19 years,, age 89 (birthdate 12/27/1934). They never married.
After my father’s death his Estate lawyer obtained a Tax ID for the Trust. Based upon his recommendation, he then created 2 Sub Trusts and 2 Tax IDs, one for my sister and the other for my father’s partner, because they are special situations. My sister isn’t good at managing money, so my father didn’t want her to get too much money at once, and his partner is in an assisted living facility.
From my father’s Trust document. I can’t tell if it was written pre or post SECURE 2.0:
“Qualified Retirement Benefits
The term qualified retirement plan means a plan qualified under Internal Revenue Code Section 401, an individual retirement arrangement under Section 408 or Section 408A, or a tax-sheltered annuity under Section 403. The term qualified retirement benefits means the amounts held in or distributed pursuant to a plan qualified under Section 401, an individual retirement arrangement under Section 408 or Section 408A, a tax-sheltered annuity under Section 403, or any other benefit subject to the distribution rules of Section 401(a)(9).
(b) Distributions from Qualified Retirement Plans to Trusts
Unless specifically stated otherwise beginning with the year of my death, if any trust created under this trust becomes the beneficiary of death benefits under any qualified retirement plan, the Trustee shall annually withdraw from the trust's share of the plan the minimum distribution required under Internal Revenue Code Section 401(a)(9). The Trustee may withdraw additional amounts from the trust's share of the plan as the Trustee deems advisable, but only if the dispositive terms of the trust authorize the Trustee to immediately distribute the withdrawn amount as provided below. The Trustee shall immediately distribute all amounts withdrawn to: to my descendants, per stirpes, who are beneficiaries of this trust; and if no descendant of mine is a trust beneficiary, then to the trust's Income Beneficiaries in equal shares.
Amounts required to be withdrawn and distributed under this Section will reduce mandatory distribution amounts under other provisions of this trust that otherwise require distribution of all the trust's income.
This Section's purpose is to ensure that the life expectancy of the trust beneficiaries may be used to calculate the minimum distributions required by the Internal Revenue Code. This Section is to be interpreted consistent with my
intent, despite any direction to the contrary in this trust.
(с) Minimum Required Distribution
In administering the trust, the minimum required distribution for each qualified retirement plan for any year is the greater of: the value of the qualified retirement plan determined as of the preceding year end, divided by the applicable distribution period; and the amount that the Trustee is required to withdraw under the laws then applicable to the trust to avoid penalty. If a Grantor dies before the required beginning date for a qualified retirement plan, the applicable distribution period means the beneficiary's life expectancy. If a Grantor dies on or after the required beginning date for a qualified retirement plan, the applicable distribution period means the beneficiary's life expectancy, or the deceased Grantor's remaining life expectancy, if longer.
Notwithstanding the foregoing, if a Grantor's death occurs on or after the required beginning date for a qualified retirement plan, the minimum required distribution for the year of death means: the amount that was required to be distributed to the Grantor with respect to the qualified retirement plan during the year; minus amounts actually distributed to the Grantor. Life expectancy, required beginning date and other similar terms used in this Subsection, are to be determined in accordance with Internal Revenue Code Section 401(a)(9)”
