We received the following question in response to this article from a reader that is worth sharing broadly.

"Why do we suggest that IRA beneficiaries be individuals, not trusts?"

Here is our reasoning. A beneficiary of an inherited IRA is allowed to spread the withdrawals over his or her life span. If the beneficiary is a trust, then the question is what’s the lifespan of a trust. IRS can take the view that trust has no lifespan and therefore all of the money should be withdrawn in year one. It is possible to create a trust to make sure that IRS will not take this view but it requires careful following of the rules and documentation. I believe it is easier to have individuals as beneficiaries to take advantage of spreading the withdrawals, and there is no real downside to doing so in our opinion for most people.

The link below provides some guidance to those that still want to list trusts as beneficiaries.

https://www.lordabbett.com/en/perspectives/retirementperspectives/desig…