A: Undistributed income is only taxed to a beneficiary if the trust requires all income must be paid out currently or the beneficiary has an unrestricted withdrawal right (for example, not subject to HEMS standard). An accumulation trust would never be designed to have either provision, because these provisions would virtually eliminate any asset protection, which is the primary reason for an accumulation trust. If a conduit trust is used, this does require all IRA distribution to be paid out to the beneficiary and thus they are taxed to the beneficiary.
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