Distribution of Inherited IRA and Inherited Roth IRA from Trust

Submitted by Glenn Wager on Fri, 2020-02-14 00:22

I have a client whose father passed away in 2019. His IRA and his Roth IRA named his Living Trust as beneficiary. As such, the accounts were subsequently moved into an Inherited IRA and an Inherited Roth IRA, respectively, in the name of the Trust under its SS number (which was assigned after the father passed away).

The daughter is an only child. She is the sole trustee and the only current beneficiary. The trust states that “I give the residuary trust estate to my successor trustee who shall distribute my Trust Estate equally to my children if he or she survives me. If any one or more of my children do not survive me, his or her share shall be distributed to his or her issue by representation.”

Sooooo……What the daughter wants to know is can she have the Inherited IRAs distributed in tact into an Inherited IRA and Inherited Roth IRA, respectively, in her name and under her SS number?

Thanks in advance for your help.

Glenn

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Permalink Submitted by Alan - IRA critic on Fri, 2020-02-14 01:04

Yes, the trust gives her the authority to distribute trust assets out of the trust by sending written notice to the IRA custodians as the trustee of the trust that she is assigning the inherited IRAs to the trust beneficiary. She will then have inherited IRAs titled to show her as the beneficiary of her father. The Secure Act is immaterial here since he passed in 2019.
The trust is either qualified for look through or is not. Part of the qualification process is to provide trust information with respect to beneficiaries and whatever else the IRA custodians wish, no later than 10/31/2020. If the trust is qualified her, RMDs for her inherited IRA will be based on her single life expectancy (Table I). If not qualified for some reason, she must distribute the IRA in 5 years if father passed prior to the RBD, or over his remaining life expectancy if he passed on or after his RBD.