Trust as IRA Beneficiary
Husband passed away with beneficiary of IRA as a Trust. Wife is the sole Beneficary and TTEE of the Trust. Can I roll this IRA into the wife’s rollover IRA? Husband was 60 at death, wife is 60 years old. Is there a link to the rules for when an IRA with Trust as bene can be rolled into the spouse’s IRA?
Permalink Submitted by mk foss on Tue, 2010-10-05 21:21
Many private rulings have been given that allowed an IRA to be rolled over by the surviving spouse when he/she is the trustee and beneficiary of the trust that is the IRA beneficiary. People have paid big money for these rulings. Can you do it without a ruling? That depends on the custodian. I understand that some will allow it if you find them a PLR with similar facts and sign a “hold harmless” letter in case it blows up.
Bruce Steiner had an article on this. He will probably post a link.
Permalink Submitted by Bruce Steiner on Tue, 2010-10-05 22:17
Here is the link to my article on this subject in the October 1997 issue of Estate Planning: http://www.kkwc.com/docs/AR20050125164755.pdf. There have been many similar rulings since then.
It would be an unusual trust that would qualify for that. Occasionally someone creates a marital trust and gives the spouse the right to withdraw all of the assets of the trust. Such a trust should qualify for the spousal rollover.
(I don’t know why anyone would bother to create such a trust. It doesn’t provide any asset protection, nor does it allow for the possibility of not electing QTIP for some or all of the trust.)
I think the IRS user fee for a private letter ruling is now $10,000. The legal fees will probably be in the four figures. But since this has been around for many years, it may be possible, as Mary Kay pointed out, to persuade the custodian to permit the rollover without a private letter ruling. Some custodians will allow the rollover with a legal opinion.