Retirement Plan Strategies
Journal of Retirement Planning (10/01) Vol. 4, No. 5 p.11; Steiner, Bruce D.

In the latest issue of the Journal of Retirement Planning, Bruce D. Steiner looks at the differences between a traditional QTIP trust and a conduit QTIP trust as a beneficiary of retirement benefits. According to Steiner, the key differences between a conduit QTIP trust and a traditional QTIP is that under the new minimum required distribution (MRD) rules, the spouse is treated as the sole beneficiary of the conduit QTIP trust. The effects of such an arrangement are as follows: In a conduit QTIP, there are no MRDs until the IRA owner reaches age 70.5, whereas in a traditional QTIP, the MRDs begin in the year following the IRA owner's death. Under a traditional QTIP, assuming the spouse is the oldest beneficiary of the trust, the MRDs are based upon the spouse's life expectancy as of the IRA owner's death, reduced by one year for each year elapsed. In short, Steiner says, a conduit QTIP trust is the better deal of the two because it allows slower distributions than the traditional IRA.


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