Estate Planning Topics
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Are you looking to have control over your IRA assets after they’ve been passed along to your beneficiaries? You’ve worked hard to build your nest egg, and you want to ensure that your assets are utilized in the best way possible—but how?
A see-through trust is a trust that is treated as the beneficiary of your IRA and can provide you with a higher level of control over your assets. However, there are certain requirements that must be met in order for a trust to qualify as “see-through.” If it doesn’t, the IRA will be treated as if there was no designated beneficiary, and the payout will be based on the rules that apply in that situation.
To qualify as what the IRS refers to as a “see-through” trust for IRA distribution purposes, the trust must meet the following four requirements outlined in Regulation Section 1.401(a)(9)-4, A-5.
We've summerized the requirements below:
1. The trust is valid under state law or would be but for the fact that there is no corpus.
2. The trust is irrevocable or the trust contains language to the effect it becomes irrevocable upon the death of the employee or IRA owner.
3. The beneficiaries of the trust who are beneficiaries with respect to the trust’s interest in the employee’s or IRA owner’s benefit are identifiable.
4. The required trust documentation has been provided by the trustee of the trust to the plan administrator no later than October 31st of the year following the year of the IRA owner’s death.
Click here to download “4 Requirements of a See-Through Trust” to see exactly why the IRA should NEVER be moved into the trust.
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