Be very careful about designating trusts as beneficiaries. Some trusts
are treated as if they were the beneficiary, so that distributions are
made over somebody's life expectancy. Others aren't and have to be
distributed over five years from death. The wroding is peculiar and
says, essentially, that a trust beneficiary is not a designated
beneficiary (a term of art) unless its terms are OK. Plus, if there are
multiple beneficiaries of the trust, determining whose lives matter can
be dicey. Specifically, the regs say:
(1) The trust is a valid trust under state law, or would be but for the
fact that there is no corpus.
(2) The trust is irrevocable or will, by its terms, become irrevocable
upon the death of the employee.
(3) The beneficiaries of the trust who are beneficiaries with respect
to the trust's interest in the employee's benefit are identifiable from
the trust instrument within the meaning of A-1 of this section.
(4) The documentation described in A-6 of this section has been
provided to the plan administrator.
(c) In the case of payments to a trust having more than one
beneficiary, see A-7 of section 1.401(a)(9)-5 for the rules for
determining the designated beneficiary whose life expectancy will be
used to determine the distribution period. If the beneficiary of the
trust named as beneficiary is another trust, the beneficiaries of the
other trust will be treated as having been designated as beneficiaries
of the employee under the plan for purposes of determining the
distribution period under section 401(a)(9)(A)(ii), provided that the
requirements of paragraph (b) of this A-5 are satisfied with respect to
such other trust in addition to the trust named as beneficiary.

These rules need a warning like "Don't try this at home." You should
consult with a qualified professional about any existing trusts, and
any new trust should be prepared by a lawyer familiar with retirement
plans.

Google trust ira beneficiary and you will find plenty of reading
material on the topic.

Dave

On page 10 of the Fall 2005 issue of On Investing from Schwab is an
article entitled ³Trusts as IRA beneficiaries² which contains the
following sentence:

³As a designated beneficiary a trust can take advantage of the
Minimum Required Distribution (MRD) rules, thereby stretching the IRA
distributions and allowing for continued growth and tax deferral over a
longer period of time²

Is this statement true and if so since when (I was under the
impression that a trust had to take distribution more or less at once).
--
Avrum Lapin avrum113[at]earthlink.net
Upland CA Remove NOSPAM from address