Family Trust as Beneficiary of IRA

Submitted by Wilfredo Racelis on Thu, 2015-12-10 22:12

A deceased husband named his Family Trust as his Traditional IRA beneficiary. The Trust names the husband and wife as Grantors, Trustees and primary beneficiaries. The husband was already taking his RMDs when we died. The wife is also taking RMDs.
With the wife now as the sole trustee and primary beneficiary, is her taking full distribution as Trustee of an Inherited IRA that named the Family Trust as beneficiary, paying herself as Trust Beneficiary and then rolling the inherited funds over to her own Traditional IRA a doable strategy? Will this not cause a taxable event?



Submitted by Alan - IRA critic on Fri, 2015-12-11 04:43

The IRS has issued several PLRs allowing the surviving spouse to roll over the inherited IRA in this situation. The question if whether the IRA current or new IRA custodian will require the surviving spouse to secure her own letter ruling in this particular case.



Submitted by Wilfredo Racelis on Fri, 2015-12-11 16:58

How and where can I get copies of relevant PLRs?



Submitted by Bruce Steiner on Sat, 2015-12-12 23:29

  • You can find PLRs on the IRS’ website:  https://apps.irs.gov/app/picklist/list/writtenDeterminations.html.  
  • I’ve obtained private letter rulings allowing rollovers in some of these cases.  Of course, without knowing more about the facts, we can’t tell whether a rollover would be possible in this case.


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