Question: (Eric) Hey Joe and Big Al, I got a fun question for you. The fact pattern is this: the dad has a revocable trust. It’s a pretty standard revocable trust where on his death it funds the family trust mom’s the bennie. And then on her death the trust distributes outright to the kids. Dad has a Roth IRA and he names as the designated beneficiary of that Roth IRA his revocable trust.

Dad passes in 2013. Now, since his trust is named as the beneficiary, mom cannot treat the Roth as her own. However, since the trust is considered a look-through or see-through trust, she is able to elect to receive distributions from the Roth in accordance with her life expectancy.

So in this case, when Mom passed in 2020, she had about 3.8 years left in her life expectancy. And so the IRA administrator is saying that the Roth IRA has to be paid out within that 3.8 years with her passing in 2020. Now my question is well under the SECURE Act rules, in this case, the non-eligible beneficiaries have the 10 year window in which to withdraw assets.

And so because in the trust, the kids are named individually and are identifiable, my question is, wouldn’t they be subject to the SECURE Act rules and then the payment schedule would reset to 10 years, so they would have to clear out the Roth IRA towards the end of 2030 in 10 years. So that was my question and just kind of kind of wanted to get your two cents on this, guys.

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CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period….(read more)

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