See through trust as beneficiary
Do employer based retirement plans that require a lump sum distribution from the plan and the beneficiary is a see-through trust can the inherited IRA rollover rules be used to defer the income tax consequences?
Do employer based retirement plans that require a lump sum distribution from the plan and the beneficiary is a see-through trust can the inherited IRA rollover rules be used to defer the income tax consequences?
Permalink Submitted by Alan Spross on Mon, 2011-03-07 22:22
Yes, see the following Q&A from IRS Notice 2007-7. Note that the trust must be “qualified” for look through treatment, and if so the plan MUST offer the direct rollover:
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Q-16. If the named beneficiary of a decedent is a trust, is a plan permitted to
make a direct rollover to an IRA established with the trust as beneficiary?
A-16. Yes. A plan may make a direct rollover to an IRA on behalf of a trust
where the trust is the named beneficiary of a decedent, provided the beneficiaries of the
trust meet the requirements to be designated beneficiaries within the meaning of
§ 401(a)(9)(E). The IRA must be established in accordance with the rules in Q&A-13 of
this notice, with the trust identified as the beneficiary. In such a case, the beneficiaries
of the trust are treated as having been designated as beneficiaries of the decedent for
purposes of determining the distribution period under § 401(a)(9), if the trust meets the
requirements set forth in § 1.401(a)(9)-4, Q&A-5, with respect to the IRA.
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