Placing a Roth IRA Account in a Revocable Trust with a beneficiary designation

Submitted by James Sheehan on Sun, 2023-11-05 16:50

I have a Revocable Trust. I have a trust account that includes some equities in a trust account for me and in another trust account for my wife……I havew (5) Roth IRA accounts that are not in my trust. Should they be? I have different beneficiary designations for each of these (5) Roth accounts. I was recently advised to put these Roth accounts into our trust accounts so they do not have to go through Probate… but, our trust accounts do not provide for beneficiary designations are are destined to go to our children…whereas some of the Roth accounts are for our grandchildren….my question is…can i place in a Trust account and still have a beneficiary designation for these Roth accounts??

I was told that if these Roth accounts are not in a trust they could be tied up for some time and not be available to their designated beneficiaries??



Submitted by Alan - IRA critic on Sun, 2023-11-05 17:08

Only an individual can own an IRA. A trust can be named as beneficiary of an IRA and inherit it when the owner passes and the trustee of the trust will then control the inherited IRA according to the provisions stated in the trust. The trust needs to be drafted to meet the requirements of a “qualified trust” to avoid having a limited distribution period for a Roth IRA of 5 years, and the trustee must submit the trust provisions to the IRA custodian by 10/31 of the year following your death or the trust will not be qualified, regardless of how drafted. There are several purposes for trusts, depending on your goals, but avoiding probate is not one of them since naming a direct beneficiary on your IRAs also avoids probate. Do your beneficiaries need creditor protection including from spouses or is a trust needed to control distributions to spendthrift beneficiaries? Typically, due to the Secure Act, unless the trust beneficiaries are disabled or chronically ill, an inherited IRA will have to be distributed in 10 years. What you were told about IRAs being tied up is not true, as a named beneficiary (if not a minor) can immediately file a death certificate and provide their contact info to the IRA custodian and have control of their inherited IRA in a couple weeks after your death. 

Submitted by James Sheehan on Sun, 2023-11-05 17:20

One of my Roth accounts is significantly greater than the 3.5M estate level in MN.  How will the MN estate taxes be handled by a grandson who is the beneficiary?

Submitted by Alan - IRA critic on Sun, 2023-11-05 19:04

Your estate executor is responsible for filing the MN estate tax return, but you need a plan to determine the source of funding for the state estate tax payments. Perhaps this accounts for the statement that your assets would be tied up for a time pending state estate tax filing and payment (payment due in 9 months). While this site does not deal with estate taxes and particularly individual state estate taxes, I assume that MN could place a tax lien on assets that have been distributed out of the estate to beneficiaries if the estate tax has not been paid. 

Submitted by James Sheehan on Wed, 2023-11-15 20:15

My grandson will inherit a Roth IRA with a value of approximately $5M.  I understand that this account must be closed 10 years after his inheritance.  My question is…could he wait until the 9+ year to change the account to a taxable account?  Or, must he take partial withdrawals every year>>

Submitted by Alan - IRA critic on Wed, 2023-11-15 22:20

Annual RMDs in years 1-9 are only required if you pass after your required beginning date (RBD). Your RBD depends on your DOB.

Submitted by Norman Cook on Thu, 2023-11-16 00:21

Roth IRA do not have RDB do they????????

Submitted by Alan - IRA critic on Thu, 2023-11-16 00:42

Correct, they do not. Therefore, the beneficiary will not have to take any annual RMDs, just drain the account by the end of year 10.

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