roth ira

Submitted by alfred valenti on Mon, 2015-10-19 19:07

My daughter passed away at age 50 leaving her living trust as the beneficiary to her roth ira.I am the trustee. Her daughter is the beneficiary of the trust. The roth ira meets the 5 year rule and meets the conditions for a qualified distribution. The trust calls for the first disbursement in 6 years and last in 11 years. Beneficiary is 18 years old.

1 Am I correct in that no taxes are due because it is a roth ira
2 What are the rules requiring timely distributions while in the trust.
3 How does the custodian title the check going to the trust.
4 Can the funds get comingled with other funds in the trust.



Submitted by Bruce Steiner on Mon, 2015-10-19 19:47

It may be worth looking to see whether the trustee may stretch disributions over your granddaughter’s life expectancy.  That’s not always possible when you run the IRA though a living trust, but sometimes it’s possible.  See my article on trusts as beneficiaries of retirement benefits:  http://www.elderlawanswers.com/Documents/Trusts%20as%20Beneficiaries%20of%20Retirement%20Benefits.pdf.



Submitted by Alan - IRA critic on Mon, 2015-10-19 19:53

  1. Correct. All Roth distributions will be tax free.
  2. If the trust is qualified for look through treatment per page 12 of Pub 590 B, Roth RMDs paid to trust will be based on her daughter’s life expectancy. If trust is not qualified, the Roth must be drained in 5 years. If trust is eventually terminated and the Roth assigned to beneficiary, RMDs do not change.
  3. Check should be made to you as trustee of the trust. 1099R to be issued to trust EIN.
  4. Yes, subject to proper trust accounting. Trust will be accumulating income and filing a 1041 as a complex trust.


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