Stretch IRA if Trust is Beneficiary of Deceased’s IRA?
Hi,
My question is:
Can a deceased’s Roth IRA with a trust as beneficiary be rolled into a stretch IRA by one of the trust’s 1/5 beneficiaries when it is split after the Roth’s 5-year “seasoning period”?
Is this what is considered a look through?
Where do I find “proof” to send the agency creating the split?
Brian Phillips
Kalamazoo, Mi
Permalink Submitted by Alan Spross on Tue, 2010-05-11 20:37
If the trust is allowed to terminate, the inherited Roth can be assigned to the trust beneficiaries as an inherited Roth IRA subject to RMDs. But since the separate account rules do not apply to trust beneficiaries, each beneficiary will have to use the life expectancy of the oldest beneficiary of the trust.
Most trusts qualify for look through treatment. The requirements are outlined on p 38 of Pub 590. The trust instrument must also be submitted to the IRA custodian as part of those requirements. The 5 year holding period only deals with qualifying the earnings in the Roth for tax free distribution.