Stretching an IRA when a trust closes and distributes all it’s assets
Mother age 75, who was taking RMD’s, died and left her IRA to a qualified trust for her daughter. Trust was taking RMD’s for a number of years, based on the daughters life expectancy. While the daughter was alive she was the only beneficiary of the trust. The daughter then died and the trust provisions call for the trust to close and be paid outright to a granddaughter. Question: Can the granddaughter do an inherited IRA and stretch the payments from the IRA. Also if this can be done, would she use her age or her mothers age to figure the RMDs.
Permalink Submitted by Alan - IRA critic on Wed, 2021-08-11 23:50
The trustee should be able to assign the inherited IRA out of the trust to an inherited IRA for the granddaughter. If the daughter passed after 2019, the 10 year rule will apply to the granddaughter per the Secure Act. Under the 10 year rule, there are no annual RMDs but the inherited IRA must be drained by the end of the 10th year, so the account might require good tax management for timing out the IRA distributions. Some IRA custodians do not cooperate with trustee or executor assignments to beneficiaries even though the IRS has ruled affirmatively to these assignments for many years now.