However, structured properly, a trust can qualify as a "designated beneficiary," thus making it possible to "look through" the trust and use the life expectancies of the trust beneficiaries for distribution purposes if the following conditions are satisfied:
A. The trust must be valid under applicable state law.
B. The trust must be irrevocable or become irrevocable at the time if your death.
C. All trust beneficiaries must be individuals and must be identifiable from the trust document.
D. Documentation regarding trust beneficiaries, or a copy of the trust document, must be provided to the plan administrator or IRA custodian no later than October 31 of the year following your death.
If your trust has multiple beneficiaries and some are not individuals, then this can disqualify your trust from "Designated Beneficiary" status. Furthermore, if your trust has multiple beneficiaries and all are individuals, then generally all trust beneficiaries must take distributions over the life expectancy of the oldest trust beneficiary.
Excerpt from The Complete Guide to Estate and Financial Planning in Turbulent Times (Collaborative Press, 2011) - Walt Dallas, Contributing Author
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