Harmonizing Powers of Appointment With RMDsHarmonizing Powers of Appointment With RMDs
Official guidance is needed. Until then, take steps to protect the stretch.
January 30, 2018
When qualified retirement benefits, such as a profit-sharing account or an individual retirement account, are payable on death to a trust, four requirements must be met to stretch out distributions of those benefits, based on the age of a trust beneficiary.1 If those rules are met, the trust is said to have a “designated beneficiary” for purposes of required minimum distributions (RMDs).
The designated beneficiary is fixed as of Sept. 30 of the calendar year following the calendar year of the account owner’s death. The designated beneficiary must be identifiable among persons who were account beneficiaries on both the date of the decedent’s death and Sept. 30 of the following year.2 In addition, the members of a class of beneficiaries cap...
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