Alex Does an inherited IRA have to be distributed in 10 years?
The 10-year rule only says that the inherited retirement account must be completely distributed by the end of the tenth year after the year of death.
Can a trust be the owner of an inherited IRA?
However, a trust also can be named as an IRA beneficiary, and in many instances, a trust is a better option than naming an individual. When a trust is named as the beneficiary of an IRA, the trust inherits the IRA when the IRA owner dies. The IRA then is maintained as a separate account that is an asset of the trust.
Can an eligible designated beneficiary use the 10-year rule?
The IRS also clarified that while eligible designated beneficiaries, or EDBs, still qualify for the stretch IRA, they can elect the 10-year rule, but only if death occurs before the required beginning date.
How do I disperse an inherited IRA?
If the original owner of the IRA was your spouse, then you have the following options when inheriting the IRA.
- Roll the inherited funds into an IRA in your own name.
- Withdraw the funds as a lump sum.
- Use the five- or 10-year withdrawal method.
- Use the life expectancy withdrawal method.
- Disclaim the inherited assets.
What is the 10-year rule for inherited IRAs?
The 10-year rule requires the IRA beneficiaries who are not taking life expectancy payments to withdraw the entire balance of the IRA by December 31 of the year containing the 10th anniversary of the owner’s death.
Can a trust be divided into inherited IRAs?
The trustee of the trust proposed to divide the IRA via trustee-to-trustee transfers into inherited IRAs, one for the benefit of each of the trust beneficiaries, each in the name of the decedent.
When do beneficiaries of inherited IRAs have to be distributed?
Any individual beneficiary may elect to distribute the inherited IRA assets over the five years following the owner’s death. The distribution must be completed by the end of the year containing the fifth anniversary of the owner’s death.
Can you make an in kind distribution to an inherited IRA?
Making an in-kind distribution to inherited IRAs for the benefit of the estate or trust beneficiaries is the way to meet these objectives.
Can a spouse be the sole beneficiary of an inherited IRA?
Spouse as sole primary beneficiary. If the owner’s spouse chooses to take the IRA as a beneficiary rather than assume the account, he or she can choose when to begin taking RMDs on the basis of his or her own life expectancy.
The trustee of the trust proposed to divide the IRA via trustee-to-trustee transfers into inherited IRAs, one for the benefit of each of the trust beneficiaries, each in the name of the decedent.
Any individual beneficiary may elect to distribute the inherited IRA assets over the five years following the owner’s death. The distribution must be completed by the end of the year containing the fifth anniversary of the owner’s death.
Can a trust be named as a beneficiary of an IRA?
Instead of naming your trust as a beneficiary, you could simply name the two individuals as beneficiaries on your IRA and indicate the 50/50 split. This will accomplish a similar outcome and does not require you to update your trust. As a reminder, the beneficiary designation on your retirement accounts supersedes the instructions in a trust.
Making an in-kind distribution to inherited IRAs for the benefit of the estate or trust beneficiaries is the way to meet these objectives.