[WSBAPT] IRA distributions through trust (testamentary) under SECURE act - 2020 0623

[Diane J. Kiepe]

Mark,

I have worked quite a bit with conduit and accumulation trusts.  The drafting of the conduit trust under secure you can provide for an up-to 10 year stretch but there is no reference to RMD as there was in the past.

Naming the estate is the least desirable of all options not so much for tax reasons but the potential to expose such funds to the creditor’s of the plan participant in certain instances when it would otherwise be protected from the same.

I’d be happy to set up a time to chat-it’s an area difficult to just e-mail about.

Best of luck,

Diane J. Kiepe

Diane J. Kiepe
Douglas Eden
717 W. Sprague Ave.
Suite 1500
Spokane, WA  99201
djkiepe at depdslaw.com<mailto:djkiepe at depdslaw.com>
509-455-5300

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of 1 Mark Mullins Law Office
Sent: Tuesday, June 23, 2020 4:45 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] IRA distributions through trust (testamentary) under SECURE act - 2020 0623


Dear Listmates:

These questions are based on a testator/rix who would rather designate benefits (%s) through the Will than a host of separate IRA beneficiary designations. While I expect this may not work, will be uncertain under the SECURE Act, or significantly expand the length of his Will, and that it may be best to designate separate beneficiaries to allow all of them the benefit from their own use of the 10-year rule, I thought I should see what options are out there.

Under the SECURE Act, can conduit testamentary trusts be used to spread out over 10 years (including delay into the 10th year) the recognition of standard (i.e. non-Roth) IRA income for designated beneficiaries (in this case, the spouse will be the primary beneficiary, but we're planning for the death of the surviving spouse and there are no (disabled, minor, etc.) beneficiaries eligible for stretching)?

Not having done a IRA benefit conduit trust in the first place, what/where is a good resource for a form or provisions for a conduit trust?

Also, can the Will have separate IRA benefits conduit testamentary trusts (1 for each beneficiary), so each beneficiary gets the most stretching possible (in this case, stretching will no longer mean over life expectancy but spreading out or postponing over the 10 years allowed)?

Finally, if the IRA simply goes to the estate, does that result in an immediate recognition of income of the entire IRA, or is there still an option to spread the income out over 5 years (presumably evenly)?

Mark D. Mullins
Attorney at Law



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