IRA beneficiary as Trust naming Charity as beneficiary
Decedent named revocable trust as beneficiary of IRA. Trust provides for charity as beneficiary. We notified brokerage firm of death and they set up an Inherited IRA in the name of the Trust. We now want to transfer the assets in kind to the charity to minimize income tax impact. Brokerage firm will not transfer to the charity’s brokerage account indicating it MUST be an Inherited IRA account.
Is this the correct policy?
Is there an easier way to provide the assets to the charity?
Permalink Submitted by Alan - IRA critic on Mon, 2023-07-31 20:44
Either way, this should not have a particular impact for the charity. It could easily cash out the inherited IRA. But it may have an affect on the 1041 in certain cases, since assignment out of the trust to an inherited IRA is a non event for the 1041, this bypasses the potential loss of the charitable deduction if the trust was not drafted correctly with respect to qualifying for the Sec 642(c) charitable deduction. That said, the CPA would usually make this suggestion, not the IRA custodian. Finally, if the charitable bequest is pecuniary (a dollar amount rather than a %), there could be a problem either way.