Reply To: IRA to Trust

Home Fairmark Forum Retirement Savings and Benefits IRA to Trust Reply To: IRA to Trust


It’s probably my fault because of the way I asked the question. Maybe I caused some confusion by not asking it right. So I’ll try again.
Let’s just say that my wife has passed on and I am still here. At this point in time my IRA beneficiary document lists an irrevocable trust that has not been funded yet as the recipient of 40% of my IRA. Since I am still alive the money is still mine. It’s not in the trust. Upon my death the trust will become funded with 40% of the funds in my IRA. Now when I have passed on my IRA doesn’t exist any more. The money has been dispersed to all the beneficiaries. This trust that now has 40% of my former IRA in it is for my niece. Since she does not handle her money very well I had the trust written so that she gets an amount of money each month instead of all at once. Now the question I have is as follows. Is the money in that trust still part of my IRA? Does it transfer to the trust as an IRA for my niece? Or is it just money that transferred to the trust and it’s not an IRA? As I write these questions I am almost convinced that the money in the trust has to be an IRA because if the money was taken out of the IRA then taxes would have had to be paid. I need to get this question answered because of the new ten year rule to deplete a inherited IRA. If the trust is still an IRA then I have to go back and have the trust language tweaked to have the money depleted within ten years. I had this trust written before 2020 and I didn’t know the IRS was going to change the ruling.