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?

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

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Apr 13, 2011
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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