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)

  1. Can personal loans be included in bankruptcy?

    Personal loans from friends, family and employers fall under common categories of debt that can be discharged in the case ... Read Full Answer >>
  2. How much money does Texas make from unclaimed property each year?

    In 2014, the office of the Texas Comptroller of Public Accounts reported $234 million in unclaimed property claimant liabilities, ... Read Full Answer >>
  3. How much money does Michigan make from unclaimed property each year?

    According to the 2013-2014 Annual Report of the State Treasurer, the state of Michigan earned only $82,875 in abandoned and ... Read Full Answer >>
  4. Who decides if a financial security should be escheated?

    There is no one entity who "decides" to escheat assets. Rather, financial institutions are required to report inactive accounts ... Read Full Answer >>
  5. What financial assets can be escheated?

    Any financial assets you hold at a bank or investment or brokerage firm can be escheated by the state government if your ... Read Full Answer >>
  6. How much money does New York make from unclaimed property each year?

    According to the Office of the New York State Comptroller, types of unclaimed property accounts include bank accounts, wages, ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Do You Need More Than One Financial Advisor?

    Using more than one financial advisor for money management has its pros and cons.
  2. Insurance

    Cashing in Your Life Insurance Policy

    Tough times call for desperate measures, but is raiding your life insurance policy even worth considering?
  3. Savings

    How To Set Up A Trust Fund If You're Not Rich

    You don't need to be worth millions to create your own trust fund. Learn how your money can be handled in the event of your death.
  4. Financial Advisors

    Passing an IRA to a Trust: The Good and Bad

    Creating a trust is a common estate planning tactic, but naming a beneficiary to an IRA to a trust may have unintended consequences.
  5. Retirement

    5 Reasons Retirees Are Upsizing Instead of Downsizing Their Homes

    Many retirees opt to downsize to save money, but there are many who are doing the opposite and upsizing.
  6. Professionals

    How Income-Shifting Strategies Can Help Cut Taxes

    There are many ways that your clients can move money or other assets to relatives in order to reduce their tax bills. Here's a primer on best practices.
  7. Insurance

    How To Read a Permanent Life Insurance Illustration

    To help you understand your life insurance policy, companies provide a permanent life insurance illustration. Here is how to read and understand it.
  8. Savings

    How To Set Up A Trust Fund If You’re Not Rich

    Contrary to popular opinion, trust funds are not just for the rich. Middle class citizens can set them up, as well.
  9. Insurance

    Who Should Be Your Life Insurance Beneficiary?

    It might seem logical to just name your young children, but doing so can have undesirable consequences. Here are some better ways to plan.
  10. Personal Finance

    The Ten Commandments of Personal Finance

    Here are the simple financial Ten Commandments that, when faithfully followed, can lead to a secure economic future.
  1. Taxes

    An involuntary fee levied on corporations or individuals that ...
  2. Fiduciary

    A fiduciary is a person who acts on behalf of another person, ...
  3. Letter of Intent - LOI

    A document outlining the terms of an agreement before it is finalized. ...
  4. Wealth Management

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

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

    The entity that establishes a trust. The settlor also goes by ...

You May Also Like

Trading Center