inherited IRA
Our client had an IRA worth about $2.5 Million at the time of his death in August, 2022. The client’s assets are at a brokerage firm and are being transferred to a new investment banking firm (New Firm).
As the client is deceased, the New Firm advises they cannot set up an IRA account but rather need to do an Inherited IRA Account.
The client, a widow, has designated the beneficiary of his IRA as the Family Trust. All of the Inherited IRA will ultimately be transferred to a subtrust of the Family Trust for one son. However, the agreement and documentation to create this subtrust may take a month or two.
The New Firm suggests that we create an Inherited IRA with the Family Trust as the beneficiary. When the paperwork and agreement to create the subtrust for the son is finalized, the Inherited IRA would be transferred to an Inherited IRA for the son’s subtrust.
Is this approach correct? We need to be certain we are not creating a taxable event by these transactions.
Permalink Submitted by Alan - IRA critic on Mon, 2024-02-26 19:03
What was the beneficiary designation of the IRA at client’s death, the widow or the trust?