Trust as IRA Beneficiary | Ed Slott and Company, LLC

Trust as IRA Beneficiary

D passes away on 2020 at age of 89. Traditional IRA names D's Living Trust as sole beneficiary. The sole beneficiary of D's Trust is D's son, S. As it stands, Custodian says it will re-title the account as D's Inherited IRA fbo the Trust.

Is it allowed under the Regs. to look past (or through) the Trust so that the account may be re-titled as D's Inherited IRA fbo S?

So would rather not have to keep the Trust open for the up to 10 years that account might be in existence before the newly required final distribution date as provided in the SECURE Act.

The inherited IRA must be titled to reflect the trust as the beneficiary of D. If the trust provisions allow or the trustee has discretion to assign the inherited IRA out of the trust to the trust beneficiary S, then the IRA can be retitled showing S as the beneficiary and S will have full control of the inherited IRA, can name their own successor beneficiary and change investments or IRA custodian by transfer. However, this will not change the 10 year rule distribution period under which the IRA must be drained by 12/31/2030. There have been several PLRs approving assignment from the trustee or executor, but some IRA custodians are less than cooperative in doing this. Finally, note that the trust provides some IRA creditor protection that S may not have once the trust is terminated.

 

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