Most Efficient Way to put an Inherited IRA into a Special Needs Trust

Submitted by Arek Puzia on Fri, 2022-10-21 16:42

I wanted to see if there were any good ideas here. Mom dies in 2022 with a $1M IRA and has 4 kids. The IRA is to go to the 4 kids, so each will take it as an inherited IRA. However, a SNT is setup for child #4. So 3 kids will just have the standard Inherited IRA we all know and love. But child #4 has a SNT. Is it possible for the SNT to have the Inherited IRA and since the child has special needs they can stretch it like the good old times? Or would trust rules apply and 5 years to take out the current $250K? Is there an optimal way to think about this? Thank you!



Submitted by Alan - IRA critic on Fri, 2022-10-21 21:59

  • PLR 2006 20025 resulted in the applicant being able to transfer the inherited IRA into a self settled SNT. The drawback of a self settled trust is that govt benefits paid during the life of the SNT beneficiary can be recovered after the beneficiary’s death.
  • For this work an IRA custodian must be willing to cooperate, and it is not totally clear how the multi beneficiary Secure Act trusts will affect this. See p 25 and 26 of the following highly technical article.
  • 2022_05_24_ACTEC_Comments_on_Proposed_Regulations_IRS_REG-105954-20.pdf


Submitted by Arek Puzia on Fri, 2022-10-21 23:46

Thank you!!



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