IRA in a trust distribution
My wife, who is recently deceased had an IRA with our trust as a beneficiary. There was no second beneficiary on the account. I have been told that the trust must be liquidated within 5 years. However, if I can go to court and have a judge sign an order that assigns the IRA to me then the term can be stretched to 10 years. If this is the case, is there a way to stretch the IRA over the life of the beneficiary? I also wonder if I should change the beneficiary method on my personal IRA. I’m trying to give my descendants the ability to stretch the distributions out for tax purposes.
Thank you
Permalink Submitted by Norman Cook on Thu, 2022-04-28 14:12
When did your wife die? How old was she? Are you the only beneficiary of the trust?
Permalink Submitted by John Rodenbo on Thu, 2022-04-28 14:55
She passed way on 2/20/2022. DOB was 1/11/1951 ( 71 years old) She passed away from Glioblastoma ( brain cancer) 4 months after diagnosis. I’m the first beneficiary, upon my death the trust get’s split 4 ways, 3 children (25%) each and 25% to grandchildren
Permalink Submitted by Norman Cook on Sun, 2022-05-01 14:54
A trust is not an individual but can be a Designated Beneficiary if certain rules are met which allow the underlying individual beneficiaries of the trust to be considered the Designated Beneficiary in lieu of the trust. The requirements which must be met for a trust to qualify as a Designated Beneficiary are:
The trust must be valid under state law.
The trust is irrevocable or will, by its terms, become irrevocable upon the death of the participant.
The beneficiaries of the trust must be identifiable from the trust document.
Certain documentation must be provided to the plan administrator of the IRA by October 31 of the year after the participant’s death.
If the trust qualifiees the 10 year rule (not the 5 year rule) applies if ALL the beneficiaries of the trust are real living people. If a non-person is a beneficiary (such as a charity the 5 year rule applies)
However, if surviving spouse is the ONLY beneficiary of the trust is permitted to treat the inherited IRA as his or her own and take distributions based upon his or her life expectancy. Additionally, the spouse (or a trust for his or her benefit) is not required to begin taking RMDs until the end of the year in which the deceased participant would have reached age 72.
I suggest you read other posting on trust as beneficiaries
Permalink Submitted by John Rodenbo on Mon, 2022-05-02 14:54
Thanks for your help
Permalink Submitted by Bruce Steiner on Mon, 2022-05-09 03:14
It depends on the terms of the trust.
Depending on the terms of the trust, you may be able to roll it over. See my articles on this in the October 1997 issue of Estate Planning, https://www.kkwc.com/wp-content/uploads/2015/04/AR20050125164755.pdf , and the June 2015 issue of Trusts & Estates, https://www.kkwc.com/wp-content/uploads/2015/08/IRA-Rollovers-Making-this-option-possible.pdf .