A:

Related information can be found in IRS publication 590. See page 32 (bottom right hand corner) and page 35.
If the trust is qualified, as described on page 35, distributions may occur over the life expectancy of the oldest beneficiary under the trust.

If the trust is not qualified, then the following applies:

  1. If the IRA owner dies before the required beginning date, the assets must be distributed by December 31 of the fifth year following the year the IRA owner died.
  2. If the IRA owner dies on or after the required beginning date, the assets must be distributed over the remaining life expectancy of the decedent.

The assets can't be rolled to a retirement account, but they can be transferred to an inherited IRA. When speaking with the financial institution, be sure to use the right terminology, as use of the wrong terminology could result in transactions that you do not want. When moving the assets to an inherited IRA, please check to make sure that any document you sign is not a distribution request, but a transfer request. If you sign a distribution request and the assets are distributed from the IRA, the amount will not be eligible to be rolled to an IRA and will be treated as ordinary income.

Please discuss the matter with the financial institution and a competent tax professional to ensure that all the necessary steps are taken to ensure compliance, as well as to ensure that you make the most financially suitable choices.

For more information about inherited IRA assets, check out Inherited Retirement Plan Assets – Part 1, Inherited Retirement Plan Assets – Part 2, The Importance Of Sept. 30 For Multiple Beneficiaries.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS

  1. How does the trust maker transfer funds into a revocable trust?

    Learn how revocable living trusts are established, how the trust maker transfers funds into the trust, and the advantages ...
  2. What is the difference between a revocable trust and a living trust?

    Learn how a revocable trust and living trust are two terms used to describe the same thing and what the key provisions are ...
  3. What is a family Limited Liability Company (LLC)?

    Learn about family limited liability (LLC) companies and why they are useful tools in the United States to protect family ...
  4. How is maintenance of standard of living for survivors accomplished in estate planning?

    Understand what elements of an estate plan can assist in creating certainty for survivors that allows them to maintain their ...
RELATED TERMS
  1. Wealth Management

    A high-level professional service that combines financial/investment ...
  2. See-Through Trust

    A trust that is treated as the beneficiary of an individual retirement ...
  3. Settlor

    The entity that establishes a trust. The settlor also goes by ...
  4. Personal Representative

    The executor or administrator for the estate of a deceased person. ...
  5. Contingent Beneficiary

    1. A beneficiary specified by an insurance contract holder who ...
  6. Laughing Heir

    A distant relative who has inheritance rights despite not having ...

You May Also Like

Related Articles
  1. Professionals

    Is a Google Robo-Advisor on the Horizon?

  2. Entrepreneurship

    MLPs: How They Are Taxed

  3. Investing Basics

    Passing Boomers Will Leave A Big Economic ...

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!