Trust terminating
Hello, Happy Holidays. I want to thank all of the members who have taken the time to respond to my post. Really appreciate your help.
An inherited IRA with trust as the account owner is terminating now that the beneficiary has just turned 23 years old. Before the trust terminates, is the distribution made payable to the trust or to the beneficiary? The accountant I spoke to told me that the distribution will be make payable to the trust and should be deposited into a non-qualified trust account and from there gets paid out to the beneficiary.
It seems that the accountant is taking the extra step when the distribution can be paid directly to the beneficiary who is the same person even if the non-qualified account is set up? Am I missing something here?? Thanks again 🙂
Tony
Permalink Submitted by Alan Spross on Tue, 2009-12-29 19:48
I agree that this appears unnecessary, but the IRA custodian will also want to weigh in on this. I assume a beneficiary at this age should be encouraged to utilize the life time stretch if possible and the RMD or any additional amount needed does not have to be distributed before dissolving the trust. Perhaps this article will help:
http://www.ataxplan.com/bulletinBoard/ira_providers.cfm
Permalink Submitted by Bruce Steiner on Tue, 2009-12-29 22:44
Why wouldn’t the trustee distribute the IRA to an inherited IRA payable to the 23-year-old rather than risking a claim by the beneficiary against both the trustee and his/her accountant for destroying the value of the stretchout by cashing in the IRA?