Inherited IRA’s held by a trust
Dad sets a up a revocable trust which owns 2 IRA’s and other taxable investments. The 2 beneficiaries are adult children. Dad was already taking RMD’s, and dies in 2010. The children plan to have the IRA custodians issue the 2010 RMD to the trust and then would like to have the IRA custodians divide the IRA’s into inherited stretch IRA’s to be distributed over their individual life expectancies. The trust document appears to allow them to distribute all assets after death, but the IRA custodians apparently need convincing that stretch IRA’s are allowed. I had read in Slott newsletters that if only one trust is used for an IRA with multiple beneficiaries, then the life expectancy of the oldest beneficiary must be used by all. But does this apply to divided inherited IRA’s that are now held outside the trust?
Permalink Submitted by Alan Spross on Mon, 2010-08-16 18:42
Following is a link that explains assigning inherited IRAs to the beneficiaries of an estate or trust:
http://www.ataxplan.com/bulletinBoard/ira_providers.cfm
Since the trust was the named IRA beneficiary, and if the trust is qualified for look through treatment, the oldest beneficiary of the trust is treated as the designated beneficiary for RMD purposes. Subsequent assignment of the IRA to the trust beneficiaries does not change this.