Transforming a Trust Into A See-Through TrustTransforming a Trust Into A See-Through Trust
When beneficiaries include charities, meeting the required minimum distribution rules can get complicated.
Over the years, you’ve no doubt read many articles and private letter rulings about what it takes for a trust to qualify as a “see-through trust” under the required minimum distribution regulations (RMDs) for retirement accounts.1 For a trust to be classified as see-through, it must:
be a valid trust under state law or would be but for the fact that there’s no corpus;
be irrevocable, or will, by its terms, become irrevocable on the death of the account owner,2
have beneficiaries who are identifiable from the trust instrument within the meaning of Treasury Regulations Section 1.401(a)(9)-4, A-1; and
have documentation described in Treas. Regs. Section 1.401(a)(9)-4, A-6 that’s been provided to the plan administrator (or IRA sponsor).3
The biggest hurdle is the third requirement that all beneficiaries must be “identifiable.” Decoded, that means that all trust beneficiaries must be “designated beneficiaries,” that is, the trust beneficiaries who may have any interest in the retirement accounts payable to the trust must all be individuals.4
The regulations provide an off-ramp for those trust beneficiaries that aren’t individuals, usually, charities.5 The regulations and PLRs provide that ...
Unlock All Access Premium Subscription
Get Trusts & Estates articles, digital editions, and an optional print subscription. Choose your subscription now and dive into expert insights today!
Already Subscribed?
