Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

If a trust is a Qualified Retirement Benefits Trust is a…

If a trust is a...
If a trust is a Qualified Retirement Benefits Trust is a form 1041 required to be filed? The trust started from parent retirement plan, placed in trust. Now RMD is ongoing, but is a 1041 required?
Show More
Show Less
Ask Your Own Tax Question
Answered in 14 minutes by:
4/24/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,894
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. My name's Lane.

...

A retirement plan cannot be placed in trust. Partly because retirement accounts ARE trusts (this is why we need an underlying bank or trust company for qualified plans).

...

Trusts, however CAN be the beneficiary of a retirement account.

...

And in this scenario, yes, there needs to be a 1041, because the trust becomes irrevocable a at the death of the grantor, and because the RMD is the trust's, as well (and must be reported on the 1041).

...

Best practice then is to have the trust pass out the RMD to the beneficiary(ies) via the 1041's K-1, as (you may know this) trusts and estates reach the 39.6% bracket at a little over 12,000 of income, where individuals don't reach the 39.6% bracket until income reaches over 400,000.

Ask Your Own Tax Question

Based on what you said about RMD, this likely qualifies as a See-Through trust, which allows the oldest of the individual trust beneficiaries to be treated as if he or she were named directly.

...

The inherited IRA can be stretched over that person’s life expectancy. If the trust does not qualify as a see-through trust, then the IRA will be treated as if there was no designated beneficiary and the post-death payout will not be based on a beneficiary’s life expectancy. It will be based on the rules that apply when there is no designated beneficiary for an IRA.

...

To qualify as what the IRS refers to as a “see-through” or “look-through” trust for IRA distribution purposes, the

trust must meet the following requirements: (Regs §1.401(a)(9)-4, A-5)

...

1.The trust is valid under state law.

2. The trust is irrevocable or it becomes irrevocable upon death.

3. The beneficiaries of the trust are identifiable.

4. The required trust documentation has been provided by the trustee of the trust to the IRA custodian (or plan administrator for a company plan) no later than October 31st of the year following the year of the IRA owner’s death

...

It's being irrevocable, and having taxable income, is what triggers the need to file the 1041.

Ask Your Own Tax Question

The five year rule applies for trusts that were not carefully drafted as see-through trusts.

...

Please let me know if you have ANY questions at all, before rating me.

I hope you’ll rate me (using those stars, or faces on your screen, by clicking submit) based on thoroughness and accuracy, rather than any good news / bad news content.

Otherwise I’ll receive no compensation for the work here at all, from JustAnswer.

Thank you!

Lane

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance a BBA, and CFP& CRPS (Chartered Retirement Plans Specialist) designations,as well - I’ve been providing financial, Social Security/Medicare, estate,corporate, non-profit, and tax advice, to clients on three continents since1986.

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,894
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
Ask your own question now
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,894
14,894 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

Lane is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
I am a trustee of a trust and I have never filed a separate
I am a trustee of a trust and I have never filed a separate irrevocable income tax return. My parents have always paid the income taxes on their return, since it was their house before putting it in a… read more
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,610 satisfied customers
What if a 1099R wasn't received for a traditional IRA
What if a 1099R wasn't received for a traditional IRA because no distributions were taken. However, RMD should have been taken. Should the IRA information still be entered on the 1040 using the 12/31/… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
My parents created a simple irrevocable trust in 1995. In
My parents created a simple irrevocable trust in 1995. In getting an EIN for it, May 2106, the IRS said I need to file form 1041 for 1996-2016. How do I do this? … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,328 satisfied customers
I am in the process of setting up a trust for my grandchild.
I am in the process of setting up a trust for my grandchild. I currently have a Roth IRA. My wife is the first beneficiary, while this trust will be the contingent beneficiary. If I die first she will… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I received a 1099 R from monies i receive from my deceased
please, i received a 1099 R from monies i receive from my deceased husband. while filing my taxes i was asked if the RMD had been taken care of? Do i need to do this RMD on this money? Nationwide said… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
I have a client who is 72 and currently employed by a
I have a client who is 72 and currently employed by a University, offering a 403b. He will retire in January 2017. He is considering rolling some of his employer plan to an IRA for more active account… read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
1,453 satisfied customers
EIN issued to an Irrevocable Income Only Trust. It was
EIN issued to an Irrevocable Income Only Trust. It was issued for an aging parent who has dementia. EIN issued letter states that form 1041 is due. The parent is in a home and receive SS and her retir… read more
Jonathan Tierney
Jonathan Tierney
MBA
295 satisfied customers
I had Social Security Disability, but I was able to work a
I had Social Security Disability, but I was able to work a part time job for 9 years. I am still working When I turned 66, and my Social Security Disability turned into Social Security Retirement. My … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
If I take a lump sum distribution from my pension and put it
If I take a lump sum distribution from my pension and put it in an IRA or annuity do I have to pay take on the whole amount in the year that I take the distribution or can I pay tax on the retirement … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Is RMD applicable to a traditional non-contribution pension?
Is RMD applicable to a traditional non-contribution pension? I am over 70.5 years of age and have not yet started pension payout since I am still employed, but not by the company with whom I earned th… read more
Megan C
Megan C
Certified Public Accountant (CPA)
Master's Degree
8,655 satisfied customers
I am 70 and a half and turn 71 this year and want to start
I am 70 and a half and turn 71 this year and want to start getting my Required Minimum Distribution (RMD) now, I have a problem with the two financial institu- tions that have my 457b money. According… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
The father of a friend of mine died in 2009 and he had his
The father of a friend of mine died in 2009 and he had his living trust as his IRA beneficary. My friend had the trust moved to a beneficary IRA trust. She (my friend) is taking RMD each year. My frie… read more
socrateaser
socrateaser
1,031 satisfied customers
Relating to my first paid question... when the trust files
Relating to my first paid question... when the trust files its return 1041 and shows income of $44641.81, would the same deductions apply that were filed with the state of indiana on their estate deat… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am 73, so I must withdraw each year from my annuity. When
I am 73, so I must withdraw each year from my annuity. When I requested the required minimum deduction from Hartford Insurance in 2010, I also signed up for an automatic withdrawal of the required ded… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
My parents are retired and living on social security. They
My parents are retired and living on social security. They have a home that they are renting out, and have interest and loss they can show as write offs. so, my question is...they have a total of $84k… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have managed accounts at a major brokerage house for my non
I have managed accounts at a major brokerage house for my non contributory IRS, IRA annuity and Keogh. At age 69 in year 2000, I took out an annuity from 1/2 of my IRA. It was implied or I misundersto… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
When The Reserve Money Market fund broke the buck in 2008,
When The Reserve Money Market fund "broke the buck" in 2008, a separate Reserve fund also failed (RPYQX--not a money market fund). RPYQX is currently in liquidation, being administered by a financial … read more
Charles Greiner
Charles Greiner
Owner
Bachelor's Degree
2,436 satisfied customers
I am a university professor older than 70.5 still working and
I am a university professor older than 70.5 still working and still contributing to my TSA and ORP retirement plans. I also have seperate IRAs. This is the first year for me to take required minimum d… read more
Merlo
Merlo
Tax Consultant
558 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x