Author Topic: Beneficiary or Living Trust  (Read 1421 times)


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Beneficiary or Living Trust
« on: March 18, 2022, 07:16:40 AM »
Our tIRA and Roth have 2 different beneficiary designations. The tIRA has our beneficiaries listed out in %s to each beneficiary. The Roths are designated to our Living Trust. Which method is easiest for the beneficiaries upon our death? Do the Roth beneficiaries pay taxes on their inheritance as individuals? The beneficiaries are the same for the IRAs and the Living trust so it doesn't matter to us either way. We simply want the easiest transition in case of our deaths.

I understand the tIRA beneficiaries have 10 years to decide what to do with their inherited individual IRAs. Is it the same with Roth?


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Re: Beneficiary or Living Trust
« Reply #1 on: March 25, 2022, 11:14:57 AM »
I would discuss this with the person that helped you create the living trust.

Trusts add a layer. More layers = more complexity. I don't know or understand all the details of trusts. Worst case, trusts have more aggressive RMD rules than an inherited IRA (5 years vs 10.)

If your estate is worth ~$22 million+ (married couple) then the estate will pay some taxes (maybe state level estate tax on smaller amounts.) Else there are no taxes on an inherited Roth - the taxes have already been paid by definition of a Roth-type account (assuming meets 5-year rule.)

Yes, same 10 years to distribute funds from an inherited IRA, both Roth and Traditional. With traditional, the beneficiary will pay taxes at their rate. With Roth, no taxes (taxes paid previously at  legator's rate.)