I have an issue where the IRA holder named a trust as the beneficiary of the IRA. Form my understanding of the final RMD regs, specifically treas 1.408-8 Q&A 5, this designation cannot be passed on to the underlying beneficiaries of the trust. This means that all post death distributions must be reported under the name and tax ID number of the trust beneficiary. The trustee may then pay the funds to the underlying beneficiaries of the trust.

However, I am being challenged. I am being told by the trustee of the trust that the effect that the underlying beneficiaries of the trust can be treated as the direct beneficiary of the IRA, and not just for purposes of calculating RMDs as provided in the regs, but that we should ignore the trust altogether and treat the underlying beneficiaries of the trust as if they were the direct designated beneficiaries ( i.e. , instead of naming the trust, the IRA Holder named the individuals as the beneficiaries)

What is the right approach or permissible allowances.

Thanks for your help.

I am unfamiliar with 1.408-R

There is a lot of information in 1.401(a)(9)-4 "Determination of the designated beneficiary"

Also, try: http://benefitslink.com/articles/15things.shtml

The Trust is the Beneficiary of the IRA and any distributions will be taxed to it. You cannot add bene's after death. (It may have been named for the exact purpose of not allowing the beneficiaries to take the $$ and run, which this instance proposed would allow.)

The reg's look-through provision is solely for the determination of the applicable distribution period under 401(a)(9). (1.401(a)(9)-4 as you stated)

I do not know much about Trust/estate tax law but I'm guessing there is quite a benefit of avoiding the trust by the weekly calls I alone receive on this subject. :/

-D

Harwood. I edited. It should be 1.408-8, not 1.408-R

Thanks for your help.

I get the impression that the customer is somehow confusing trust laws with the CUstomer's responsibility for tax reporting

Jane

Thanks Derelict.... you and I posted at the same time