Permalink Submitted by Alan - IRA critic on Sat, 2021-10-30 04:08
Yes, the executor (or PR) of the estate must open an inherited IRA if the estate is the IRA beneficiary. The executor can also assign the inherited IRA out of the estate to inherited IRAs opened by beneficiaries of the estate, who can then manage their own inherited IRAs. RMDs remain the same as they would have been had the estate retained the inherited IRA.
Permalink Submitted by Pamela Knudsen on Tue, 2021-11-02 16:09
If a testamentary trust is the primary beneficiary for a Roth IRA, what is the distribution schedule? The trustee and beneficiary of the trust is the decedent’s life partner and is 9 years younger than the deceased.
Permalink Submitted by Alan - IRA critic on Tue, 2021-11-02 22:46
Will this be a conduit trust or a discretionery trust, and if the latter, will it be qualified for look through? Is the life partner the only income beneficiary if a conduit trust?
Permalink Submitted by Pamela Knudsen on Wed, 2021-11-03 13:35
I believe it will be a conduit but waiting for confirmation from the probate attorney. Trust is established 100% for benefit of life partner and terminates at her death. Residual at her death then reverts to decedant’s family.
Permalink Submitted by Alan - IRA critic on Thu, 2021-11-04 00:36
Of course, for a trust to be a conduit trust, all distributions must be immediately passed through to the income beneficiary. For the trust to qualify for look through, it must specifically be referred to on the IRA beneficiary clause, eg “trust created in my will”, sample wording below.
“Trustee Under Last Will and Testament: Jane Doe, trustee, or her successor in trust, under the Last Will and Testament of John Doe dated July 8, 2009, as admitted to probate.”
Since a conduit trust generally qualifies for look through treatment and the income beneficiary is not more than 10 years younger than the decedent, RMDs to the trust would be based on the single non recalculated (1.0 annual divisor reduction) LE of the trust’s income beneficiary.
Permalink Submitted by Alan - IRA critic on Sat, 2021-10-30 04:08
Yes, the executor (or PR) of the estate must open an inherited IRA if the estate is the IRA beneficiary. The executor can also assign the inherited IRA out of the estate to inherited IRAs opened by beneficiaries of the estate, who can then manage their own inherited IRAs. RMDs remain the same as they would have been had the estate retained the inherited IRA.
Permalink Submitted by Pamela Knudsen on Tue, 2021-11-02 16:09
If a testamentary trust is the primary beneficiary for a Roth IRA, what is the distribution schedule? The trustee and beneficiary of the trust is the decedent’s life partner and is 9 years younger than the deceased.
Permalink Submitted by Alan - IRA critic on Tue, 2021-11-02 22:46
Will this be a conduit trust or a discretionery trust, and if the latter, will it be qualified for look through? Is the life partner the only income beneficiary if a conduit trust?
Permalink Submitted by Pamela Knudsen on Wed, 2021-11-03 13:35
I believe it will be a conduit but waiting for confirmation from the probate attorney. Trust is established 100% for benefit of life partner and terminates at her death. Residual at her death then reverts to decedant’s family.
Permalink Submitted by Alan - IRA critic on Thu, 2021-11-04 00:36
Of course, for a trust to be a conduit trust, all distributions must be immediately passed through to the income beneficiary. For the trust to qualify for look through, it must specifically be referred to on the IRA beneficiary clause, eg “trust created in my will”, sample wording below.
“Trustee Under Last Will and Testament: Jane Doe, trustee, or her successor in trust, under the Last Will and Testament of John Doe dated July 8, 2009, as admitted to probate.”
Since a conduit trust generally qualifies for look through treatment and the income beneficiary is not more than 10 years younger than the decedent, RMDs to the trust would be based on the single non recalculated (1.0 annual divisor reduction) LE of the trust’s income beneficiary.