• Control beneficiary spending of 401k or IRA accounts

    From Jane@21:1/5 to All on Sun Aug 1 11:44:31 2021
    I realize this is not a tax question but I am hoping someone will have a suggestion.

    Most of my money is in either a 401(k) or IRA account. I have one child and she is beneficiary to all of the accounts. She also has a spending problem. I thought I could put my accounts into a trust but apparently I can’t do that without paying taxes
    on all the money first. I certainly am not going to do that.

    Is there anything I can do to control her access to that money? Needless to say I want her to be able to get money when she needs it but I don’t want her taking a lot out frequently. She is disabled and has no savings. I consider this money to be some
    thing to help her get through her senior years. She doesn’t think that way.

    I would appreciate any help. Thank you!

    --
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  • From Taxed and Spent@21:1/5 to Jane on Sun Aug 1 13:08:54 2021
    On 8/1/2021 8:44 AM, Jane wrote:
    I realize this is not a tax question but I am hoping someone will have a suggestion.

    Most of my money is in either a 401(k) or IRA account. I have one child and she is beneficiary to all of the accounts. She also has a spending problem. I thought I could put my accounts into a trust but apparently I can’t do that without paying taxes
    on all the money first. I certainly am not going to do that.

    Is there anything I can do to control her access to that money? Needless to say I want her to be able to get money when she needs it but I don’t want her taking a lot out frequently. She is disabled and has no savings. I consider this money to be
    some thing to help her get through her senior years. She doesn’t think that way.

    I would appreciate any help. Thank you!


    Consider removing her as the beneficiary and naming your trust, or even
    a new trust set up just for this, as the beneficiary. This trust can
    set limits to control the spending.

    I believe this would add the account balances to your decedent's estate
    for the purposes of calculating death taxes, but you may be below the
    exemption amount. No telling what the exemption amount may be when the
    time comes, though.

    --
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  • From Stuart O. Bronstein@21:1/5 to Jane on Sun Aug 1 14:18:37 2021
    Jane <jblatz2@gmail.com> wrote:

    I realize this is not a tax question but I am hoping someone will
    have a suggestion.

    Most of my money is in either a 401(k) or IRA account. I have one
    child and she is beneficiary to all of the accounts. She also has
    a spending problem. I thought I could put my accounts into a trust
    but apparently I can’t do that without paying taxes on all the
    money first. I certainly am not going to do that.

    Is there anything I can do to control her access to that money?
    Needless to say I want her to be able to get money when she needs
    it but I don’t want her taking a lot out frequently. She is
    disabled and has no savings. I consider this money to be some
    thing to help her get through her senior years. She doesn’t
    think that way.

    The IRS has rules that allow you to distribute an IRA through a trust
    into inherited IRAs. I don't know off the top of my head if that
    would allow you to have a only trustee for your child to have access
    to those funds, but it is possible. You should talk to your CPA or
    Enrolled Agent about that.

    The only other approach I can think of is for you to move that money
    into a Roth IRA over time, so that it won't be taxable as it comes
    out.

    Good luck.

    --
    Stu
    http://DownToEarthLawyer.com

    --
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    << that may be imposed upon the taxpayer. >>
    << >>
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  • From Stuart O. Bronstein@21:1/5 to Taxed and Spent on Sun Aug 1 14:20:04 2021
    Taxed and Spent <nospamplease@nonospam.com> wrote:
    Jane wrote:

    I realize this is not a tax question but I am hoping someone will
    have a suggestion.

    Most of my money is in either a 401(k) or IRA account. I have one
    child and she is beneficiary to all of the accounts. She also has
    a spending problem. I thought I could put my accounts into a
    trust but apparently I can’t do that without paying taxes on
    all the money first. I certainly am not going to do that.

    Is there anything I can do to control her access to that money?
    Needless to say I want her to be able to get money when she needs
    it but I don’t want her taking a lot out frequently. She is
    disabled and has no savings. I consider this money to be some
    thing to help her get through her senior years. She doesn’t
    think that way.

    Consider removing her as the beneficiary and naming your trust, or
    even a new trust set up just for this, as the beneficiary. This
    trust can set limits to control the spending.

    The problem is that all the money in the IRA would be subject to
    income tax when OP dies. That's something she is trying to avoid.

    --
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
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    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
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  • From Taxed and Spent@21:1/5 to Stuart O. Bronstein on Mon Aug 2 09:51:26 2021
    On 8/1/2021 11:20 AM, Stuart O. Bronstein wrote:
    Taxed and Spent <nospamplease@nonospam.com> wrote:
    Jane wrote:

    I realize this is not a tax question but I am hoping someone will
    have a suggestion.

    Most of my money is in either a 401(k) or IRA account. I have one
    child and she is beneficiary to all of the accounts. She also has
    a spending problem. I thought I could put my accounts into a
    trust but apparently I can’t do that without paying taxes on
    all the money first. I certainly am not going to do that.

    Is there anything I can do to control her access to that money?
    Needless to say I want her to be able to get money when she needs
    it but I don’t want her taking a lot out frequently. She is
    disabled and has no savings. I consider this money to be some
    thing to help her get through her senior years. She doesn’t
    think that way.

    Consider removing her as the beneficiary and naming your trust, or
    even a new trust set up just for this, as the beneficiary. This
    trust can set limits to control the spending.

    The problem is that all the money in the IRA would be subject to
    income tax when OP dies. That's something she is trying to avoid.



    The money would be subject to income tax no matter what - if converted
    to a Roth, by the trust after death if the trust is the beneficiary, or
    by the beneficiaries after death as they money is withdrawn.

    I read that the OP is concerned with not paying taxes now, to allow
    continued tax deferred growth.

    --
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    << that may be imposed upon the taxpayer. >>
    << >>
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  • From ""Retired"@home.com@21:1/5 to Taxed and Spent on Mon Aug 2 11:16:11 2021
    On 8/2/21 9:51 AM, Taxed and Spent wrote:
    Is there anything I can do to control her access to that money?


    ISTM the OP's real question was, quote "Is there anything I can do to
    control her access to that money? "

    Apparently the heir would spend it all as fast as possible.

    Taxes are a secondary issue.

    --
    << ------------------------------------------------------- >>
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    << that may be imposed upon the taxpayer. >>
    << >>
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  • From Taxed and Spent@21:1/5 to ""Retired"@home.com on Mon Aug 2 11:39:16 2021
    On 8/2/2021 8:16 AM, "\"Retired"@home.com wrote:
    On 8/2/21 9:51 AM, Taxed and Spent wrote:
    Is there anything I can do to control her access to that money?


    ISTM the OP's real question was, quote "Is there anything I can do to
    control her access to that money? "

    Apparently the heir would spend it all as fast as possible.

    Taxes are a secondary issue.


    Yes, which is why I gave my original suggestion. This was a follow up
    reply to another suggestion, which I think added a bit of confusion on
    the tax issues.

    --
    << ------------------------------------------------------- >>
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    << that may be imposed upon the taxpayer. >>
    << >>
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  • From Alan@21:1/5 to Jane on Mon Aug 2 17:26:25 2021
    On 8/1/21 8:44 AM, Jane wrote:
    I realize this is not a tax question but I am hoping someone will have a suggestion.

    Most of my money is in either a 401(k) or IRA account. I have one child and she is beneficiary to all of the accounts. She also has a spending problem. I thought I could put my accounts into a trust but apparently I can’t do that without paying taxes
    on all the money first. I certainly am not going to do that.

    Is there anything I can do to control her access to that money? Needless to say I want her to be able to get money when she needs it but I don’t want her taking a lot out frequently. She is disabled and has no savings. I consider this money to be
    some thing to help her get through her senior years. She doesn’t think that way.

    I would appreciate any help. Thank you!

    I'm confused by the answers to this query. If the owner wants to
    control (limit) how much money is distributed from an IRA that is going
    to a sole beneficiary (daughter), then the owner needs to create a
    conduit trust as the IRA beneficiary with the daughter as the trust beneficiary. This makes the daughter an EDB (eligible designated
    beneficiary) under the Secure Act.
    As such, RMDS would still use the old stretch IRA rules. The trust could
    limit annual distributions to the named beneficiary to be no more than
    the RMD.

    There are many investment firms that operate as IRA custodians and also
    provide "trusteed IRA" services.

    What am I missing here?

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
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  • From Taxed and Spent@21:1/5 to Alan on Mon Aug 2 19:45:10 2021
    On 8/2/2021 2:26 PM, Alan wrote:
    On 8/1/21 8:44 AM, Jane wrote:
    I realize this is not a tax question but I am hoping someone will have a suggestion.

    Most of my money is in either a 401(k) or IRA account. I have one child and she is beneficiary to all of the accounts. She also has a spending problem. I thought I could put my accounts into a trust but apparently I can’t do that without paying
    taxes on all the money first. I certainly am not going to do that.

    Is there anything I can do to control her access to that money? Needless to say I want her to be able to get money when she needs it but I don’t want her taking a lot out frequently. She is disabled and has no savings. I consider this money to be
    some thing to help her get through her senior years. She doesn’t think that way.

    I would appreciate any help. Thank you!

    I'm confused by the answers to this query. If the owner wants to
    control (limit) how much money is distributed from an IRA that is going
    to a sole beneficiary (daughter), then the owner needs to create a
    conduit trust as the IRA beneficiary with the daughter as the trust beneficiary. This makes the daughter an EDB (eligible designated beneficiary) under the Secure Act.
    As such, RMDS would still use the old stretch IRA rules. The trust could limit annual distributions to the named beneficiary to be no more than
    the RMD.

    There are many investment firms that operate as IRA custodians and also provide "trusteed IRA" services.

    What am I missing here?


    I think you have nailed it. It was sort of what I was suggesting, but
    you know the ins and outs of IRA far better than I do.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
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  • From Jane@21:1/5 to Alan on Tue Aug 3 09:50:54 2021
    On Monday, August 2, 2021 at 5:28:53 PM UTC-4, Alan wrote:


    I'm confused by the answers to this query. If the owner wants to
    control (limit) how much money is distributed from an IRA that is going
    to a sole beneficiary (daughter), then the owner needs to create a
    conduit trust as the IRA beneficiary with the daughter as the trust beneficiary. This makes the daughter an EDB (eligible designated
    beneficiary) under the Secure Act.
    As such, RMDS would still use the old stretch IRA rules. The trust could limit annual distributions to the named beneficiary to be no more than
    the RMD.

    There are many investment firms that operate as IRA custodians and also provide "trusteed IRA" services.

    What am I missing here?
    So Alan, you are saying the distributions to my daughter's spending could be controlled with a trust without the need to pay tax on ALL of the money in the 401k and IRA up front? I was under the (hopefully mistaken) impression that when 401k monies are
    put into a trust tax has to be paid on all of it at once.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
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  • From Stuart O. Bronstein@21:1/5 to Jane on Tue Aug 3 10:03:51 2021
    Jane <jblatz2@gmail.com> wrote:

    So Alan, you are saying the distributions to my daughter's
    spending could be controlled with a trust without the need to pay
    tax on ALL of the money in the 401k and IRA up front? I was under
    the (hopefully mistaken) impression that when 401k monies are put
    into a trust tax has to be paid on all of it at once.

    Yes, that can be done. Here's what the IRS says in Publication 590-
    B:

    "A trust can't be a designated beneficiary even if it is a named
    beneficiary. However, the beneficiaries of a trust will be treated as
    having been designated beneficiaries for purposes of determining
    required minimum distributions after the owners death (or after the
    death of the owners surviving spouse described in Death of surviving
    spouse prior to date distributions begin, earlier) if all of the
    following are true.

    "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 became, by its terms, irrevocable
    upon the owner's death.

    "3. The beneficiaries of the trust who are beneficiaries with respect
    to the trust's interest in the owner's benefit are identifiable from
    the trust instrument.

    "4. The trustee of the trust provides the IRA custodian or trustee
    with the documentation required by that custodian or trustee. The
    trustee of the trust should contact the IRA custodian or trustee for
    details on the documentation required for a specific plan.

    "The deadline for the trustee to provide the beneficiary
    documentation to the IRA custodian or trustee is October 31 of the
    year following the year of the owner's death."


    --
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
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  • From BignTall@21:1/5 to Stuart O. Bronstein on Tue Aug 3 13:55:05 2021
    On 8/3/2021 9:03 AM, Stuart O. Bronstein wrote:
    Jane <jblatz2@gmail.com> wrote:

    So Alan, you are saying the distributions to my daughter's
    spending could be controlled with a trust without the need to pay
    tax on ALL of the money in the 401k and IRA up front? I was under
    the (hopefully mistaken) impression that when 401k monies are put
    into a trust tax has to be paid on all of it at once.

    Yes, that can be done. Here's what the IRS says in Publication 590-
    B:

    "A trust can't be a designated beneficiary even if it is a named
    beneficiary. However, the beneficiaries of a trust will be treated as
    having been designated beneficiaries for purposes of determining
    required minimum distributions after the owner’s death (or after the
    death of the owner’s surviving spouse described in Death of surviving spouse prior to date distributions begin, earlier) if all of the
    following are true.

    "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 became, by its terms, irrevocable
    upon the owner's death.

    "3. The beneficiaries of the trust who are beneficiaries with respect
    to the trust's interest in the owner's benefit are identifiable from
    the trust instrument.

    "4. The trustee of the trust provides the IRA custodian or trustee
    with the documentation required by that custodian or trustee. The
    trustee of the trust should contact the IRA custodian or trustee for
    details on the documentation required for a specific plan.

    "The deadline for the trustee to provide the beneficiary
    documentation to the IRA custodian or trustee is October 31 of the
    year following the year of the owner's death."



    My understanding: A conduit trust can be used to designate the daughter
    as the "designated beneficiary". Whether the daughter is an "eligible designated beneficiary" that lets the trust avoid the Secure Act's 10
    year withdrawal rule depends on whether she meets the "eligible
    designated beneficiary" requirements. An adult daughter that in the
    opinion of a parent has a "spending problem" seems unlikely meet the
    "special needs" requirement. Before this thread, I have never seen
    anybody assert that a conduit trust automatically makes a beneficiary an "eligible designated beneficiary".

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
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  • From Alan@21:1/5 to Alan on Tue Aug 3 20:15:45 2021
    On 8/2/21 2:26 PM, Alan wrote:
    On 8/1/21 8:44 AM, Jane wrote:
    I realize this is not a tax question but I am hoping someone will have
    a suggestion.

    Most of my money is in either a 401(k) or IRA account. I have one
    child and she is beneficiary to all of the accounts. She also has a
    spending problem. I thought I could put my accounts into a trust but
    apparently I can’t do that without paying taxes on all the money
    first. I certainly am not going to do that.

    Is there anything I can do to control her access to that money?
    Needless to say I want her to be able to get money when she needs it
    but I don’t want her taking a lot out frequently. She is disabled and
    has no savings. I consider this money to be some thing to help her get
    through her senior years. She doesn’t think that way.

    I would appreciate any help. Thank you!

    I'm confused by the answers to this query.  If the owner wants to
    control (limit) how much money is distributed from an IRA that is going
    to a sole beneficiary (daughter), then the owner needs to create a
    conduit trust as the IRA beneficiary with the daughter as the trust beneficiary.  This makes the daughter an EDB (eligible designated beneficiary) under the Secure Act.
    As such, RMDS would still use the old stretch IRA rules. The trust could limit annual distributions to the named beneficiary to be no more than
    the RMD.

    There are many investment firms that operate as IRA custodians and also provide "trusteed IRA" services.

    What am I missing here?

    Minor correction. The daughter would be a designated beneficiary
    subject to the 10 year rule, not an eligible designated beeficary.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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  • From Taxed and Spent@21:1/5 to Alan on Wed Aug 4 11:58:44 2021
    On 8/3/2021 5:15 PM, Alan wrote:
    On 8/2/21 2:26 PM, Alan wrote:
    On 8/1/21 8:44 AM, Jane wrote:
    I realize this is not a tax question but I am hoping someone will have
    a suggestion.

    Most of my money is in either a 401(k) or IRA account. I have one
    child and she is beneficiary to all of the accounts. She also has a
    spending problem. I thought I could put my accounts into a trust but
    apparently I can’t do that without paying taxes on all the money
    first. I certainly am not going to do that.

    Is there anything I can do to control her access to that money?
    Needless to say I want her to be able to get money when she needs it
    but I don’t want her taking a lot out frequently. She is disabled and
    has no savings. I consider this money to be some thing to help her get
    through her senior years. She doesn’t think that way.

    I would appreciate any help. Thank you!

    I'm confused by the answers to this query.  If the owner wants to
    control (limit) how much money is distributed from an IRA that is going
    to a sole beneficiary (daughter), then the owner needs to create a
    conduit trust as the IRA beneficiary with the daughter as the trust
    beneficiary.  This makes the daughter an EDB (eligible designated
    beneficiary) under the Secure Act.
    As such, RMDS would still use the old stretch IRA rules. The trust could
    limit annual distributions to the named beneficiary to be no more than
    the RMD.

    There are many investment firms that operate as IRA custodians and also
    provide "trusteed IRA" services.

    What am I missing here?

    Minor correction. The daughter would be a designated beneficiary
    subject to the 10 year rule, not an eligible designated beeficary.



    Now, if the taxpayer wanted to limit payouts to the daughter to LESS
    than the RMD, how would that be done? Would the IRA have to be
    terminated before taxpayer's death and all income taxes paid, with the
    balance funding a trust for the daughter with tighter distribution
    rules? Or could the IRA be terminated at taxpayer's death to fund a
    trust after payment of all income taxes?

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
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  • From JoeTaxpayer@21:1/5 to Alan on Wed Aug 4 12:34:57 2021
    On 8/4/21 12:16 PM, Alan wrote:
    In a conduit trust with a designated beneficiary, the 10 year rule
    merely requires that the retirement account be emptied by the end of the
    10th year after the year of death. RMDs by year do not exist.  The trust instructions could state how much is to be distributed in any given year
    and that the remaining balance in year 10 is to be distributed.

    E.g., it could say that 2.5% of the prior year-end balance is to be distributed every 3 months until the account is empty and if not empty
    by year 10 that any remaining balance is to distributed in year 10.

    This seems to mean that the funds are all available to the beneficiary
    by year 10.

    Depending on Mom's age, I'd suggest slowly taking extra distributions
    each year to balance the assets between the 10 year money, and funds
    that can be there, growing for 10 years and slowly distributed after
    that. The tax code's removal of the lifelong stretch IRA was not opposed
    life I hoped it would be. Many were using IRAs as estate planning tools.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
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  • From Alan@21:1/5 to Taxed and Spent on Wed Aug 4 12:16:03 2021
    On 8/4/21 8:58 AM, Taxed and Spent wrote:
    On 8/3/2021 5:15 PM, Alan wrote:
    On 8/2/21 2:26 PM, Alan wrote:
    On 8/1/21 8:44 AM, Jane wrote:
    I realize this is not a tax question but I am hoping someone will have >>>> a suggestion.

    Most of my money is in either a 401(k) or IRA account. I have one
    child and she is beneficiary to all of the accounts. She also has a
    spending problem. I thought I could put my accounts into a trust but
    apparently I can’t do that without paying taxes on all the money
    first. I certainly am not going to do that.

    Is there anything I can do to control her access to that money?
    Needless to say I want her to be able to get money when she needs it
    but I don’t want her taking a lot out frequently. She is disabled and >>>> has no savings. I consider this money to be some thing to help her get >>>> through her senior years. She doesn’t think that way.

    I would appreciate any help. Thank you!

    I'm confused by the answers to this query.  If the owner wants to
    control (limit) how much money is distributed from an IRA that is going
    to a sole beneficiary (daughter), then the owner needs to create a
    conduit trust as the IRA beneficiary with the daughter as the trust
    beneficiary.  This makes the daughter an EDB (eligible designated
    beneficiary) under the Secure Act.
    As such, RMDS would still use the old stretch IRA rules. The trust could >>> limit annual distributions to the named beneficiary to be no more than
    the RMD.

    There are many investment firms that operate as IRA custodians and also
    provide "trusteed IRA" services.

    What am I missing here?

    Minor correction.  The daughter would be a designated beneficiary
    subject to the 10 year rule, not an eligible designated beeficary.



    Now, if the taxpayer wanted to limit payouts to the daughter to LESS
    than the RMD, how would that be done?  Would the IRA have to be
    terminated before taxpayer's death and all income taxes paid, with the balance funding a trust for the daughter with tighter distribution
    rules?  Or could the IRA be terminated at taxpayer's death to fund a
    trust after payment of all income taxes?

    In a conduit trust with a designated beneficiary, the 10 year rule
    merely requires that the retirement account be emptied by the end of the
    10th year after the year of death. RMDs by year do not exist. The trust instructions could state how much is to be distributed in any given year
    and that the remaining balance in year 10 is to be distributed.

    E.g., it could say that 2.5% of the prior year-end balance is to be
    distributed every 3 months until the account is empty and if not empty
    by year 10 that any remaining balance is to distributed in year 10.

    --
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  • From Roger Fitzsimmons@21:1/5 to joetaxpayer on Thu Aug 5 10:07:34 2021
    On Wednesday, August 4, 2021 at 12:36:29 PM UTC-4, joetaxpayer wrote:
    On 8/4/21 12:16 PM, Alan wrote:
    In a conduit trust with a designated beneficiary, the 10 year rule
    merely requires that the retirement account be emptied by the end of the 10th year after the year of death. RMDs by year do not exist. The trust instructions could state how much is to be distributed in any given year and that the remaining balance in year 10 is to be distributed.

    E.g., it could say that 2.5% of the prior year-end balance is to be distributed every 3 months until the account is empty and if not empty
    by year 10 that any remaining balance is to distributed in year 10.
    This seems to mean that the funds are all available to the beneficiary
    by year 10.

    Depending on Mom's age, I'd suggest slowly taking extra distributions
    each year to balance the assets between the 10 year money, and funds
    that can be there, growing for 10 years and slowly distributed after
    that. The tax code's removal of the lifelong stretch IRA was not opposed
    life I hoped it would be. Many were using IRAs as estate planning tools.
    The OP is trying to balance two somewhat incompatible goals,

    Does the OP have a trusted friend (or more than one) in a suitably low tax bracket to whom the funds could be left, and then they'd have complete discretion to transfer the funds to the child? To the extent that the funds are in a Roth the tax bracket
    is irrelevant. Putting on my family counselor hat rather than financial planner, it would be good to leave written instructions. These could probably not be legally binding, but it would make it much easier for the quasi-trustee to say "Mom told me to
    give you only this much at this point."

    --
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  • From Jane@21:1/5 to All on Mon Aug 9 10:25:17 2021
    First of all, thank you all for your responses. Now things get even more complex. My daughter has MS and she is on SSDI and lives in housing for the disabled. Someone told me about a "special needs trust". I don't totally understand what it's about
    but I do know that her dad left her $10k in that kind of trust but she blew through it in less than a year so it still adversely affected her benefits. She would be getting lots more from me (unless I live to be very very very old). This is what I mean
    by she has no control.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
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