Reminder on the See-Through Rules for Trusts Post-SECURE Acts

The SECURE Act and its successor SECURE Act 2.0 created a confusing set of rules for IRA beneficiaries across the board--including trusts. Qualifying for see-through, or look-through, trust status is important if a trust is a named IRA beneficiary. Only individuals qualify for eligible designated beneficiary (EDB) or non-eligible designated beneficiary status. A trust itself would be subject to the short five-year distribution rule. When a trust qualifies as a see-through trust, it is the individual trust beneficiary's status that is relevant--allowing for application of the ten-year distribution rule or lifetime stretch that's still available for EDBs. To qualify as a see-through trust, the following must be true (1) the trust is valid under state law, (2) the trust is irrevocable or will become irrevocable on the death of the account owner, (3) the trust beneficiaries can be identified, whether by name or a specific group of individuals and (4) in the case of employer plans, the trustee provides a list of trust beneficiaries and information about their entitlement. For more information on the rules governing trust beneficiaries, visit Tax Facts Online. Read More: Link to Q3907.