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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29577
Experience:  Taxes, Immigration, Labor Relations
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Owner has an IRA whose primary beneficiary is the spouse and

Customer Question

Owner has an IRA whose primary beneficiary is the spouse and contingency beneficiary is a trust 1. Trust 1 is a living will family trust that creates Trust 2 upon the death of Owner and spouse. All assets in Trust 1 go to Trust 2. Trust 2 is a special
needs third party trust with son as sole beneficiary. Question: Can spouse still be able to use spousal choices on owner IRA or is she considered a non person because contingency benny is a non person?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

The spouse is a primary beneficiary - correct?
So the contingency beneficiary will ONLY be in effect if the primary beneficiary will not be able to accept inheritance or will disclaim that inherited IRA account.
If the primary beneficiary will take over that IRA account - the fact of having the contingency beneficiary will be irrelevant and will NOT affect the tax treatment.
The spouse as a beneficiary of that IRA account will still have a choice to treat that account as her own.

If for instance - the spouse will disclaim inheritance - and the trust becomes a beneficiary - that spousal choice will not be available.