IRA Beneficiary Trust
86yr old male client died left his IRA to his wife’s trust instead of her name. Her trust tax ID is the wife’s social. The bank set up a BDA trust IRA account. Can this be rolled over to a spousal IRA in wife’s name only? Or does it have to stay in a trust IRA BDA?
Permalink Submitted by Alan - IRA critic on Tue, 2022-05-17 16:26
There have been several PLRs over the years allowing a surviving spouse to do a spousal rollover to their own IRA. Hopefully, the IRA custodian will cooperate with the rollover. It will be easier if she is the trustee of the trust.
Permalink Submitted by Anthony Perrone on Tue, 2022-05-17 17:31
She is the trustee of her trust. So my understanding that a PLR covers this, so a custodian might reject it?
Permalink Submitted by Alan - IRA critic on Tue, 2022-05-17 18:53
Some custodians may not cooperate because they do not want to rely on PLRs. Technically, a PLR only applies to the applicant, but the IRS has consistently ruled in favor of surviving spouses over the last two decades, so many custodians, typically larger brokerages will go along. The spouse could attempt to proceed on her own, open an IRA with a custodian who will accept a rollover, but the spouse is only allowed one rollover for all IRAs in a 12 month period, so she should try to get this done by a direct non reportable transfer. She might start with the current custodian and ask them if they will do a non reportable transfer to an owned IRA there. If not, she might have to resort to a 60 day rollover if she has one available. She should not roll over the year of death RMD if husband did not complete it if she uses a 60 day rollover.
Permalink Submitted by Bruce Steiner on Wed, 2022-05-18 22:43
What is “his wife’s trust”?
If she has the right to withdraw all of the assets (in which case the trust didn’t accomplish anything), then she may roll it over. 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.