Trust as Roth IRA beneficiary
If an accumulation trust is named as a Roth IRA beneficiary, do distributions lose their tax free status when they are retained in the trust?
If an accumulation trust is named as a Roth IRA beneficiary, do distributions lose their tax free status when they are retained in the trust?
Permalink Submitted by Alan - IRA critic on Fri, 2022-06-03 14:44
RMDs and other distributions to the trust will be tax free, but earnings on those distributions in the trust will be taxable. Therefore, distributions to the trust should be delayed as long as possible and if the 10 year rule applies those distributions should be made at the end of the 10 year period. Should the trust NOT be qualified for look through (most ARE qualified), the 5 year rule will apply.