IRA in an IRRevocable Trust due to death of the Grantor
I have a client beneficiary of her husband’s IRA which was held in his Rev. Trust. Since his death, apprx. 6 months ago, the Trust is now a IRRev. Trust. Mrs. client now wants to take the $100,000 from the Trust. Can she rollover to a traditional IRA without tax consequences? The Trustee is a Corporate (Bank) Trustee. Thanks Tom
Permalink Submitted by Alan - IRA critic on Thu, 2018-04-26 18:31
It the trust provisions permit the surviving spouse to distribute funds from the trust, she can generally roll them over to her own IRA under several IRS letter rulings.
Permalink Submitted by Audrey Mushinsky on Thu, 2018-04-26 19:22
Something seems off here. As far as I know, the IRA could not have been held in the name of the trust while the husband was alive. The trust could have been named as the beneficiary of the IRA, but not the holder? the
Permalink Submitted by Alan - IRA critic on Thu, 2018-04-26 23:21
It could not have been titled to the trust. The trust was the beneficiary of the IRA despite what the OP indicated. The client (or trustee of the trust if different) should attempt to have the inherited IRA assigned out of the trust to an inherited IRA for the client. The applicable portions of the trust document will probably have to be submitted to the IRA custodian at that time, but no later than 10/31/2018 as required for trust qualification. Then the client could elect to assume ownership of the inherited IRA or if not yet 59.5 to continue it as an inherited IRA and assume ownership later on.
Permalink Submitted by Bruce Steiner on Sun, 2018-04-29 01:36
Perhaps. See my articles on this in the October 1997 issue of Estate Planning, https://www.kkwc.com/wp-content/uploads/2015/04/AR20050125164755.pdf, and the June 2015 issue of Trusts & Estates, https://www.kkwc.com/wp-content/uploads/2015/08/IRA-Rollovers-Making-this-option-possible.pdf .