Rollover Trust IRA To Surviving Spouse IRA

Submitted by Tom Rea on Sat, 2017-05-27 19:43

My wife and I had Revocable Trusts with each of us as the Trustee of the other’s Trust. Due to flawed legal advice by the estate lawyer who drafted the Trusts, my wife, now deceased, had her trust listed as the beneficiary of her IRA. I am the surviving spouse, trustee of her Trust, sole beneficiary of her Trust, and the oldest beneficiary. Her IRA is now an Inherited IRA registered in the name of her Trust at Fidelity Investments with me listed as the trustee. As the trustee, I have full discretion over all actions pertaining to her Trust. I receive an annual RMD and I’m issued a 1099-R under my SSN. I want to rollover/move her Trust IRA into my own non-trust individual IRA at Fidelity Investments.

1. Does the IRS permit this and what can I quote as the authority?
2. Can this be done without a PLR from the IRS?
3. Do you know of any cases where Fidelity has done this in the past?
4. If I can’t rollover/move the account, which RMD table should be used to calculate the RMD?



Submitted by Alan - IRA critic on Sat, 2017-05-27 22:02

Fidelity has the trust information, otherwise the trust would not be qualified for look through. There are several PLRs allowing a spouse with rights to withdraw from the trust to roll the balance over to their own IRA, and this is clearly permitted in this case. Some of these are 2006 03032, 2009 15063, and 2009 40031. Ask to speak to an inherited IRA specialist at Fidelity to see if they will transfer the balance to either an inherited IRA for you from which you can do the rollover, or directly to your own IRA. It would be a waste of money to have to go through the PLR process, but you will have to unless Fidelity concurs.  Note that since this trust became irrevocable upon your wife’s death, it should have an EIN and the 1099R should be issued to the trust EIN, so not sure why it is issued to your SSN when the payee is the trust. If this cannot be accomplished, your RMD divisor would be from Table I, and a new table divisor would be pulled from the table each year instead of the 1.0 reduction. Of course, Table I will produce a much higher RMD than the Uniform Table that applies to your own IRA.

Submitted by Bruce Steiner on Sun, 2017-05-28 01:50

  • It depends on the terms of the trust.  See my articles on this in the October 1997 issue of Estate Planning, http://kkwc.com/wp-content/uploads/2015/04/AR20050125164755.pdf , and in the June 2015 issue of Trusts & Estates, http://kkwc.com/wp-content/uploads/2015/08/IRA-Rollovers-Making-this-option-possible.pdf ,  I obtained several of the rulings cited in the articles.
  • If a rollover is permissible, Fidelity might or might not want a ruling or a legal opinion.  The lawyer handling her estate (assuming it’s someone other than the one who did her estate planning) should be able to resolve it with Fidelity.  If not, you may want to consult with competent counsel.
  • Revocable trusts make sense in some cases, and in some states.  However, they’re overhyped and oversold, and aren’t necessary in most cases in most states, and tend to be a distraction (as appears to have been the case here).

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