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Only One Named Beneficiary Required for Non-IRA Trust Dividend and Income?

I understand that a trust need name one distinct beneficiary for an IRA to pass through it so that the lifetime expectancy of that beneficiary can be used to distribute only minimums -- Required Minimum Distributions (RMD). Does the same rule (only one beneficiary) apply when you want to get the non-IRA dividends and income earned by the trust away from the trust?

Essentially, the question is whether in distributing income can more than one beneficiary be named?




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Only One Named Beneficiary Required for Non-IRA Trust Dividend and Income?

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Apr 13, 2011
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Non-IRA Income in Trust
by: Mo Johnson

Hi, the short answer is "no". The reason an IRA in a trust should normally only go to one beneficiary is due to tax rules (a benefit of an IRA) associated with the Required Minimum Distribution -- which has to be based on the life expectancy of a person. It allows you to postpone taxability of IRA proceeds until received; but there are limits to that postponing which is where the RMD rules come in.

These rules don't apply to non-IRA assets. So, the short answer is that you certainly can designate multiple beneficiaries for regular, non-IRA dividends and income.

HOWEVER, as always, you should consult with your own tax or estate planning professional. I don't know all the details of your individual situation or the unique laws in your state. So, there certainly could be reasons why you would want to have even non-IRA dividends and income go to one particular beneficiary.

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