FIREchief
Recycles dryer sheets
- Joined
- Aug 19, 2016
- Messages
- 177
I wonder (and don’t know the answer in the general case) if the expected changes in IRA treatment affect the decision to name a trust as a designated beneficiary. My understanding, likely based on Ed Slott’s “Retirement Time Bomb” book published a while ago, is that this is not recommended and my recollection is that the reason was it rules out the stretch IRA.
It depends upon how the trust is drafted. If the ten year limit sticks, then it will likely be the death of qualified conduit trusts. If properly drafted as an accumulation trust (i.e. all potential beneficiaries are "individuals" and at some point the trust requires "outright payout to now living individual - see Natalie Choate's book), then the trust can likely benefit from the same options available to an individual beneficiary. In this scenario, Roth assets will be highly preferable, as I believe they will be able to be retained in the Roth account for the full ten years, and then distributed within the trust to an after-tax account without immediate tax consequence. See my signature.