Reply To: IRA Stretch Question

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Alan S.

There are compromises possible, but they aren’t necessarily good ones. In fact, some conduit trusts out there limit distribution to RMDs, and under the 10 year rule there are no RMDs until year 10, meaning that the entire IRA would be taxable to the beneficiary in a single year. One possible alternative is to leave the IRA to a CRUT with the niece as the income beneficiary. This may well replicate the stretch in some form.

Of course, first be sure the niece does not qualify as an eligible designated beneficiary for the stretch as before. If she is disabled, chronically ill or not more than 10 years younger than you, then she is an eligible designated beneficiary.

Estate attorneys are rushing to review all current trusts, but could use some help from the IRS in revising Regs that no longer address many questions posed by the Secure Act.