Planning for Inherited Roth IRA

[Barbara]

Roth IRA owner is trying to set up a trust to be designated as beneficiary of the Roth that will pay income to his surviving spouse until she dies. He is 80;  she is 75.

The Roth was created as a conversion from a traditional IRA in 2010 so it was formed more than 5 years ago. Spouse is designated income beneficiary of the trust for the rest of her life, and then his children and grandchildren become the income beneficiary. The corpus of the trust will be distributed when the children/grandchildren attain a certain age. 

If he dies now, is the spouse required to fully distribute the Roth IRA by the end of the required 10 years period? If the spouse dies before the 10 year period will the children/grandchildren be required to distribute the remaining balance of the Roth IRA within 10 years of the Roth owners death? 

[Bruce1]

This question should be posed to an attorney. In a normal situation the wife would be able to inherited the IRA and assume it as her own. I haven't had a client name a trust as a beneficiary so it certainly complicates things.

[Lou S.]

I think having it paid to the trust negates the ability of the spouse "to stretch" it for her life time and you are stuck with the 10 year rule but as Bruce1 points out, probably a better question for an estate planning attorney who is versed in interplay of both trusts as beneficiary and ROTH IRA rules.

[Appleby]

On 6/26/2025 at 1:04 PM, Barbara said:

Roth IRA owner is trying to set up a trust to be designated as beneficiary of the Roth that will pay income to his surviving spouse until she dies. He is 80;  she is 75.

The Roth was created as a conversion from a traditional IRA in 2010 so it was formed more than 5 years ago. Spouse is designated income beneficiary of the trust for the rest of her life, and then his children and grandchildren become the income beneficiary. The corpus of the trust will be distributed when the children/grandchildren attain a certain age. 

If he dies now, is the spouse required to fully distribute the Roth IRA by the end of the required 10 years period? If the spouse dies before the 10 year period will the children/grandchildren be required to distribute the remaining balance of the Roth IRA within 10 years of the Roth owners death? 

What is his objective for naming a trust as beneficiary, instead of her? Can his goal be accomplished by naming her as the beneficiary, instead of the trust?
If he names her as beneficiary, she could move it to her own Roth IRA , where RMDs would not apply, and name her children/grandchildren as beneficiaries. 
If he names the trust as beneficiary, whether the 10-year rule applies, or the life expectancy rule ( over her single life expectancy) depends on trust language. Depending on the type of trust, either of the following could apply:

1. The 5-year rule
2. the 10-year rule
3. A choice between the 10-year rule and the life expectancy rule.

The trust attorney must review the trust to determine whether it meets the requirements that would meet his desired goal and objectives.