Roth IRA Left To Trust
Hello, I have client. There mom died and left a Roth IRA to a trust. The trust is to be split equally between the two siblings. The siblings would like to roll the Roth IRA into their own Roth IRAs.
I thought there were some courts cases over the past few years that okay this if the Trust was see through trust.
Maybe that was for spousal IRAs and not non spousal IRAs.
Thanks in advance.
Permalink Submitted by Alan - IRA critic on Thu, 2020-04-23 00:58
Permalink Submitted by Michael Cody on Thu, 2020-04-23 03:12
Mom died in 2019Trust states assets to be distributed out. No disability of beneficiary.
Permalink Submitted by Alan - IRA critic on Thu, 2020-04-23 03:56
In that case, the trustee of the trust can assign the inherited IRA out of the trust to the trust beneficiaries as separate inherited IRA accounts for each beneficiary. However, for beneficiary RMDs, the age of the oldest beneficiary must be used for both of them since the separate account rules do not apply to trusts. In other words, for their first RMD year of 2021 (2020 RMDs are waived), they would both use the same divisor which is 1.0 less than the divisor they would have used for their 2020 RMD had it not been waived.
Permalink Submitted by Herm Brames on Sun, 2020-04-26 03:29
In the above case, since the IRA is a ROTH, would there be an any MRD at all for 10 years for a non spouse beneficiary of a Trust after which the entire amount would need to be removed to be penalty free?
Permalink Submitted by David Mertz on Sun, 2020-04-26 12:36
Since Mom died in 2019, RMDs are determined using the Single Life Expectancy table. The 10-year rule only applies for participants (or beneficiaries leaving the IRA to a successor beneficiary) dying in 2020 or later.