Q: How does 'Inherited IRA' work if IRA beneficiary is a rev trust? And rev trust doc lists 2 children as beneficiaries?
IRA value $700K. Can Inherited IRA live in trust with distributions to children's accounts? What/who is taxed?
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A: Yes. A trust can be a beneficiary of an IRA. It is most common for the trust to pay the tax before distributing to the beneficiaries. The trust document should guide the trustee. Depending on whether or not the trust is a see-through trust inherited IRAs must be used up within either 5 or 10 years.
Nina Whitehurst agrees with this answer
A: Yes, definitely the Revocable Trust can be the beneficiary of the IRA. And the Trust can then distribute proceeds, per the terms of the Trust, to the children. Taxes on the IRA would normally be paid by the IRA at the time of distribution to the Trust.
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