Inherited IRA annuity to Beneficial IRA transfer
My client inherited a qualified annuity from his deceased mother. He is to receive half and a trust established for the grandchildren is set to inherit the remaining half. The question I have revolves around the trust portion of the inherited annuity. I have set up a beneficial IRA (non-annuity) established in the name of the trust. I would like to transition the portion of the annuity designated for this trust as beneficiary to this beneficial IRA using the oldest grandchild’s DOB to stretch the IRA and help minimize distributions. However, the annuity company has recently closed the annuity and sent my client a check made payable to the trust. He has not deposited the check and it has been less than 60 days. I realize it is not exactly a custodian to custodian transfer, but can we deposit this check to the trusts inherited IRA account and still maintain the ability to stretch the withdrawals? What are my/his options at this point?
Permalink Submitted by Alan Spross on Sat, 2012-01-28 19:40
The check should be made out to “IRA custodian FBO abc trust inherited IRA”, not to the trust itself. The check should be reissued and the plan should confirm that the 1099R will be coded G as a direct rollover.
For that matter, the client’s half should be handled the same way except “FBO (client name) inherited IRA”.
Note that the separate accounts for client and the trust need to be established by the end of the year following his mother’s death, so I hope she did not pass prior to 2011. That will separate the trust RMD requirements from that of the client. The trust also has reporting requirements to the IRA custodian to preserve qualified status for RMD purposes.