Transferring IRAs Out of Estates and TrustsTransferring IRAs Out of Estates and Trusts
How to distribute benefits in the most tax-efficient manner
May 27, 2015
When an individual retirement account is payable to an estate or a trust that pays outright to beneficiaries, the fiduciary will naturally wish to distribute the benefits in the most tax-efficient manner to effectuate the closing of the estate or trust. Making an in-kind distribution to inherited IRAs for the benefit of the beneficiaries is the way to meet this objective.
Estate or Trust as Beneficiary
If an IRA is payable to a trust that qualifies as a designated beneficiary under Internal Revenue Code Section 401(a)(9), the beneficiaries of the trust (and not the trust itself) will be treated as having been designated as beneficiaries for purposes of determining the distribution period.1 Accordingly, the life expectancy of the oldest ...
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