Trusteed IRA
I am a financial advisor and have a unusual situation. My client is the beneficiary of a Trusteed IRA. The document states that at age 68 (she’s currently 65), the trust terminates and must be distributed. The current distributions are based on her lifetime. Distributions began prior to SECURE Act. Would it be possible for her to become the beneficiary as an individual? If so, would she be required to take distributions under the 10 year rule? Or, will she be required to distribute the 3.5 million IRA in full at termination? Thank you in advance for you help.
Permalink Submitted by Alan - IRA critic on Wed, 2024-06-05 20:44
Assignment of the inherited IRA out of the trust to the trust beneficiary in a non reportable transfer will not change the RMD schedule from the current schedule and is not affected by the Secure Act. The only concern would be the willingness of the current IRA custodian to accept the assignment request, as some of them balk even though the IRS has consistently issued letter rulings approving assignment from the trustee of a trust or an executor in the case of an estate IRA.
With such a large inherited IRA balance, the trustee should check with the IRA custodian several months prior to the trust termination date, and if that custodian does not clearly state that they will accept assignment, the trustee can begin checking with other IRA custodians in order to transfer the inherited IRA in the name of the trust to the new custodian. The significant balance should also make acceptance of the transfer to the new custodian more likely.