Submitted By: someone
Answered: September 11, 2017 11:31 pm

Can I put my IRA into a trust?

The IRA owner cannot put his/her IRA into a trust; only an individual can own an IRA. However, the IRA owner can name a trust as beneficiary of the IRA so that funds pass into the trust when the IRA owner dies. This may be a good solution if beneficiaries are minors or there are concerns about how beneficiaries will handle an inheritance.

For income tax purposes, usually if an IRA is payable to a trust, the trust must report all of the IRA funds as income no later than the end of the fifth year following the year of death. The trust cannot be a designated beneficiary because it is not an individual. But if the trust meets certain requirements (detailed in Reg. Sec. 1.401(a)(9)-4),the beneficiaries will be treated as owning the inherited IRA, allowing  the trust to stretch out required minimum distributions over the life expectancy of the oldest beneficiary.

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Tax Glossary

Section 1231 property

Depreciable property used in a trade or business and held for more than a year. All Section 1231 gains and losses are netted; a net gain is treated as capital gain, a net loss as an ordinary loss.

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