Joint Revocable Trust as IRA Beneficiary
Husband and Wife set up a joint revocable trust. Each are the settlors/trustees/primary beneficiaries. Trust remains revocable until the death of the both settlors. Husband passed away in 2023. The trust was the beneficiary of the husband’s annuity IRA. The question is what the required distribution period is. Generally it would be 5 years for a trust that doesn’t qualify as a see-through trust.
Specific questions:
- Could the IRA be transferred to the wife? Is there any issue with the timeframe since the husband passed over a year ago
- If the trust must remain beneficiary, does the fact that the trust is revocable (and thus ignored for tax purposes), allow for it to be treated as if the wife is the direct beneficiary and thus use more beneficial RMD rules?
Permalink Submitted by Alan - IRA critic on Thu, 2025-06-19 16:50
Too bad the custodian is a life insurance company, as they are much less likely to be flexible when it comes to SS’s options. There have been several PLRs over the last 3 decades that are favorable to spousal rollovers for surviving spouses that inherit through an estate or trust (irrevocable or not), but a life company is likely to be unaware of them or overly conservative in interpreting them. If such a rollover can be done, there is no time limit to execute it.
They should be asked what they would do if she were to revoke the trust. And it is too late to consider any possible disclaimer remedies. Finally, she could not use the Uniform Table for any beneficiary RMDs (Sec 327 of Secure 2.0) as that requires the spouse to be the sole beneficiary. I doubt that even though she has full authority to withdraw or revoke the trust, that she could be treated as the sole beneficiary.
It should also be noted that if she can do a spousal rollover, unless she is under 59.5, not only would she benefit, but her own beneficiaries would avoid being successor beneficiaries.
Would help to know what each of their attained ages were in 2023. That will help in determining what the portion of any distribution made to the trust must be treated as a beneficiary RMD for 2024 or 2025, and that portion would not be eligible for a spousal rollover.