Roth IRA Trust - 1st primary beneficiary individual 1st contingent individual 2nd contingent beneficiary charity | Ed Slott and Company, LLC

Roth IRA Trust - 1st primary beneficiary individual 1st contingent individual 2nd contingent beneficiary charity

My client established a trust which will be the beneficiary of the Roth. It is an accumulation trust and my client will not consider a conduit trust. His son can live on his own but cannot handle money. The son is the primary beneficiary of the trust. Following the son, are other relatives. If any of the other relatives die, then a charity is the beneficiary. The son is 39 and the eldest age of the other relatives is roughly 70 to 75.

My reading of the law is that the Roth must be fully distributed to the trust at my client's death since it is an accumulation trust and there is a charity as beneficiary. The attorney thought it could be distributed over 5 years. My understanding is that only IRAs can be distributed over 5 years. Roths cannot since they have no participant RBD. Is my understanding correct?

Thanks as always ... Mary Dean

Actually, because a Roth IRA does not have an RBD, the owner cannot pass after it. Therefore, all Roth owners are treated as passing PRIOR TO the RBD, which means the 5 year rule applies IF the beneficiary is not an individual or a qualified trust.

  • He could have the issue of the other relatives as the subsequent beneficiaries, and eliminate the charity.
  • Bruce Steiner
 

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