Ian Berger, JD
IRA Analyst

Question:

Does a non-spouse eligible designated beneficiary (EDB) have to pay taxes on required minimum distributions (RMDs) either at the end of ten years or with annual RMDs?

Answer:

Any EDB (other than a minor child) can stretch RMDs over the beneficiary’s life expectancy. And, if the IRA owner died before his required beginning date (RBD) for starting RMDs, the EDB can instead elect the 10-year rule. In that case, the entire inherited IRA must be emptied by the end of the 10^th year following the year of death. Annual RMDs are permitted, but not required, during the 10-year period. The EDB will need to pay taxes on any RMD received, either annually if the stretch is used or in the 10^th year (or sooner) if the 10-year rule is used.

Question:

I am a big fan of yours and respect your opinion. I have a rollover IRA from which I have been taking annual required minimum distributions (RMDs) because I am well past my required beginning date (RBD). I also make maximum annual qualified charitable distributions (QCDs) to reduce my tax burden. I am also the trustee and income beneficiary of a marital trust which is the beneficiary of my late wife’s IRA. Can I also make annual QCDs from this trust?

Thank you,

Richard

Answer:

Hi Richard,

Thanks for the kind words! Unfortunately, a trust that is the beneficiary of an inherited IRA cannot make QCDs because only individuals age 70½ or older can do so. The individual can be either an IRA owner or an IRA beneficiary. Since a trust is not an individual, it is not eligible.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

https://irahelp.com/taxes-on-required-minimum-distributions-and-qualified-charitable-distributions-from-trusts-todays-slott-report-mailbag/