Pre-SECURE bene IRA – can you stretch and later annuitize?
Owner of Roth IRA passes in 2019. Leaves Roth to qualified trust. Trust beneficiary is deceased owner’s grandkid.
Trust language says trust must wind up and distribute assets to grandkid when she turns 30, which is three years away. Grandkid is a spendthrift. No apparent way to extend the life of the trust or create a successor trust to remain as a firewall between GK and the money.
So no stretch RMD due last year. Stretch RMD already taken this year. RMDs will continue to be taken as required.
After four years of stretching, can trustee annuitize the bene Roth account before winding up the trust, so that Grandkid doesn’t inherit a lump sum of cash, but rather the annuitized income stream?
Alternately, with the suspension of RMDs under CARES last year, does trustee have the option of annuitizing this year, before 12/31?
Please and thanks.
Permalink Submitted by Alan - IRA critic on Mon, 2021-11-08 20:10
My impression is that most insurance company IRA custodians will not annuitize a beneficiary IRA. And if one can be found, they might not annuitize for a trust beneficiary when the trust has no LE. They would have to be willing to use the GK’s age, but would also have to re issue the IRA annuity when the IRA is assigned out of the trust to the GK under GK’s SSN rather than theh trust EIN. So my guess would be just too many hurdles to overcome, but no harm is talking to a couple insurers to see if they have a solution.