QTIP transfer to Marital Trust

[jane123]

My partner usually helps me with these things, but she will be out for awhile and the customer is antsy. Any help will be greatly appreciated.

QTIP trust is beneficiary of IRA.

The trustee wants to transfer the assets from the inherited IRA in the name of the QTIP trust to an inherited IRA for a Marital trust. Is this allowed? If not, can you please tell me why?

[BPickerCPA]

A trust does not become a "QTiP" trust until and unless an election is made on a Form 706. So your question is somewhat confusing.

Basically, if the IRA beneficiary form designated a trust as the beneficiary, lets call it Trust X, then Trust X is the beneficiary, whether or not a QTiP election is made for Trust X. If another trust also exists, say Trust Y, you cannot transfer the IRA into the name of Trust Y, unless (1) Trust Y is a successor in interest to Trust X, or (2) a Court reformation of the Trust documents.

From your question, it sounds like QTiP trust and Marital trust have different beneficiary interests, which means a transfer of the IRA from one to the other would constitute a prohibited distribution.

That's how it looks from here. You would really have to sit down with a KNOWLEDGEABLE attorney and IRA specialist to hash this all out in person.