Roth IRA and GST tax
If my client designates her grandchildren as the beneficiaries of her Roth IRA, this is subject to GST tax, correct? (assuming the parents are living)
If she filed a Form 706 at her death, she would allocate GST exemption to that transaction. What if she does not file a 706? How does she report the allocation of GST exemption to that transaction for tracking purposes?
Permalink Submitted by Bruce Steiner on Mon, 2012-06-18 15:57
Her executors will allocate her GST exemption on her estate tax return. If her executors do not allocate her GST exemption on her estate tax return (including if no estate tax return is required for estate tax purposes and no estate tax return is filed to allocate her GST exemption), the default allocation rules will apply. The default allocation rules are too complicated for this forum, but can be found in Section 2632. If her estate is large enough that her GST transfers will exceed her GST exemption, her lawyer, or the lawyer for her estate, should be familiar with this and be able to advise her, or her executors, how best to allocate her GST exemption.