Probate & Trust Law Section Conference Manual ... - Minnesota CLE

must be made within five years after P’s death. IRC
§§ 401(a)(9)(B)(i)-(ii); Treas. Reg. § 1.401(a)(9)-3.
c. If S is the DB, S may defer taking distributions until S attains her
own RBD by rolling over the account to her own IRA.
IRC § 408(d). S can then spread payments over the joint life
expectancy of S and a deemed DB 10 years younger, using the
Uniform Lifetime Table. Treas. Reg. § 1.408-8, A-7.
d. The Code and Regulations limit DBs to individuals. IRC
§ 401(a)(9)(E); Treas. Reg. § 1.401(a)(9)-4, A-1. Neither a charity
nor a charitable trust is a DB. Further, neither the estate of P nor
P’s revocable trust is a DB. Treas. Reg. § 1.401(a)(9)-4.
e. As a general matter, trusts are also not DBs.IRC § 401(a)(9)(B).
However, certain noncharitable trusts may be considered “see
through” trusts for purposes of determining whether there is a DB
whose life expectancy may be used to measure RMDs after P’s
death. IRC § 401(a)(9)(B)(ii); Treas. Reg. § 1.401(a)(9)-4, Q&A-
5. A discussion of those trusts is beyond this presentation.
f. If a charity or a charitable trust is the sole beneficiary of the
account, the account must be distributed to the charity within five
years after P’s death because it is not a DB. IRC § 401(a)(9)(B)(ii);
Treas. Reg. § 1.401(a)(9)-1, Q&A-4; PLR 201021038. The charity
beneficiary may claim the account be paid in a lump sum. Because
the charity or charitable trust is tax-exempt, no income tax will
normally be imposed.
g. If there are multiple beneficiaries of a retirement account, all
beneficiaries must be considered in determining whether there is a
DB. Treas. Reg. §§ 1.401(a)(9)-4, 1.401(a)(9)-5. However, if a
beneficiary is eliminated or paid out by September 30 th of the year
following P’s death (the “beneficiary determination date”), that
beneficiary is not considered in determining whether the account
has a DB. Treas. Reg. § 1.401(a)(9)-4, Q&A-4. Thus, if a charity
or a charitable trust is a beneficiary for part of the account and
individuals are beneficiaries of the balance and the share
designated for the charity or charitable trust is distributed by the
beneficiary determination date, the charity will not be considered a
beneficiary for purposes of determining whether there is a DB.
Treas. Reg. § 1.401(a)(9)-4, A-4(a). Then the remaining individual
beneficiaries may be considered DBs under the RMD rules and
their life expectancies will determine the required withdrawals.
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