Coronavirus-related IRA Distribution Repaid by Trust (Not an Individual) - Is that allowed for trusts?

Forum|Forum|5 years ago
May 5, 2021
6 replies
38 views

My client is a trust that received a $20,000 IRA distribution in 2020 (been receiving their IRA distribution as a beneficiary since 2009).

I filed the 2020 trust tax return two months ago. Now, the financial advisor tells me that the trust repaid/returned the IRA distribution to the custodian in 2020 in accordance with the coronavirus relief rules and is requesting that I amend the 2020 trust return to remove the IRA income. (Yes, the distribution qualifies as coronavirus-related distribution.)

Is that allowed? Was a trust allowed to send a coronavirus-related IRA distribution back to the custodian or was that only permitted to be done by individuals?

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qbteachmt

Level 15

Here's the part I find confusing: You don't just "receive" a distribution. Someone requests a distribution (typically, the account owner) or an Event triggered a distribution (the death of the account owner) to the Beneficiary, which would be the trust.

Are you sure this trust is the Owner of that IRA account, and it is taking distributions?

Have you read Form 8915-E instructions to see if, once you understand the relationship of Trust to Account, what does and does not qualify under "covid disaster distribution" and what does and does not qualify to be repaid under that provision:

https://www.irs.gov/pub/irs-pdf/i8915e.pdf

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Just-Lisa-Now-

Intuit Community Champion

Someone makes their trust the beneficiary of the IRA, then when they die the bank pays it out to the trust.

I have no clue if repayment is allowed by a trust though.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

qbteachmt

Level 15

You cannot Repay an IRA to an account that no longer exists. That's why you have to figure out what is going on here. Perhaps the inherited IRA went to a beneficiary and this is their trust, and all of their income goes here? We don't know.

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