Re registration of an Inherited IRA owned by a trust
Back on 1-22-2019 you had the following questions submitted:
RE-REGISTRATION OF AN INHERITED IRA OWNED BY A TRUST
Submitted by vahanian@vahani… on Tue, 2019-01-22 12:06
As I read thru this situation it is exactly what is happening to our client with the unfortunate situation that the K-1 was prepared, the client paid a very large tax bill and the new custodian/a local bank has re registered the account as another Beneficiary IRA and now any time the client takes a distribution he is issued a 1099R?
The distribution from the Beneficiary IRA and issuing of the K-1 happened in 2017. The re registration from the trust to the individual happened in 2017, to the new Bene IRA in the individual’s name. In 2018 and 2019 the individual has taken distributions and has recieved 1099-R for distributions from a Bene IRA and has been taxed again.
The Bank is washing their hands of any wrong doing. Where does the client go from here?
Permalink Submitted by Alan - IRA critic on Thu, 2020-02-20 00:17
The K 1 should only have reported IRA distributions made to the trust and passed through to the beneficiary. If the trustee then assigned the inherited IRA out of the trust to the trust beneficiary, distributions from the IRA thereafter would generate a 1099R to the beneficiary. There shouldn’t be any double taxation unless a major error occurred.