Wasting Trust

Wasting Trust

1. A trust in which the principal does not generate sufficient income to meet desired payouts and therefore the beneficiary receives a portion of the principal each month. Obviously, this reduces the future income potential of the remaining principal. A wasting trust only occurs if further contributions (which increase the principal) are not made.

2. A trust that holds assets that dissipate over time, such as contracts on corn and gas.
References in periodicals archive ?
The IRS then indicated, although not in writing, that it would not continue to press its argument that a sponsorless wasting trust was not a qualified plan.
Based on the assurances received from the IRS at the time, and the position taken on audits since that time, it now appears that a sponsorless wasting trust (frozen plan) is qualified and could be a vehicle for a rollback of amounts held in a rollover IRA.