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Last Updated March 23, 2009
A trust is a qualified trust if it meets the following requirements:
- The trust is a valid trust under state law, or would be but for the fact that there is no corpus.
- The trust is irrevocable or will, by its terms, become irrevocable upon the death of the employee.
- The beneficiaries of the trust who are beneficiaries with respect to the trust's interest in the employee's benefit are identifiable
- The trust documentation, showing the designated beneficiary as of September 30 of the year follow the year of death, has been provided to the plan administrator or IRA custodian/trustee by October 31 of the year following the year-of -death. There must be an agreement to provide the IRA custodian/plan trustee of any future amendment made to the trust. As an alternative to providing a copy of the trust, the following can be provided:
- A list of all of the beneficiaries of the trust (including contingent and remaindermen beneficiaries with a description of the conditions on their entitlement sufficient to establish that the spouse is the sole beneficiary) for purposes of section 401(a)(9);
- A certification that, to the best of the participant’s knowledge, this list is correct and complete and that the requirements for the trust to be qualified ( as noted above( are satisfied ;
- An agreement that , if the trust instrument is amended at any time in the future, the participant will, within a reasonable time, provide to the IRA custodian/plan trustee corrected certifications to the extent that the amendment changes any information previously certified; and
- An agreement to provide a copy of the trust instrument to the IRA custodian/plan trustee upon demand
The participant/beneficiary may look through a qualified trust and use the life expectancy of the oldest beneficiary to calculate RMD amounts.
Treas. Reg. §1.401(a)(9)-4, Q&A-5
Additional Helpful Information
- If there are multiple beneficiaries of the trust, the life expectancy of the oldest beneficiary must be used [Treas. Reg. 1.401(a)(9)-4, A-5(c)]
- If the spouse of the participant is the sole beneficiary of the trust, the participant may apply the RMD calculations rules that would apply had the spouse been the direct beneficiary