Can an IRA Go Into an Irrevocable Trust?

Using a trust as the designated beneficiary of an individual retirement account is permissible and, given the proper use of the trust, even desirable. An irrevocable trust can be used either during the IRA owner's lifetime or upon his death; however, tax considerations typically favor using a revocable trust during owner's lifetime, which becomes irrevocable upon the owner's death. In this situation, the owner has some control over the distribution of the IRA funds to his beneficiaries after his death.

Estate Planning Considerations

A common estate planning goal is to manage and control the distribution of your estate assets to your beneficiaries, particularly in situations where the beneficiaries are still minors or have special needs requiring careful asset management. A trust is a useful means of accomplishing such estate planning goals, assuming the appropriate type of trust is chosen. For most circumstances, a "see-through" or "designated beneficiary trust" is the right trust to use. This type of trust is established during your lifetime as a revocable trust with your assets -- excluding your IRA -- placed in the trust; however, the designated beneficiary of your IRA is the trust. After your death, the trust becomes irrevocable and the assets, along with your IRA funds, distributed as stated in your trust.

Qualifying Trust

To qualify as a see-through or designated beneficiary trust, your trust document must meet certain requirements: The trust must comply with the law of the state where you live; it must become irrevocable when you die; the beneficiaries must all be individuals and identified in the trust; and by October 31 of the year following your death, the trust document must be received by the custodian of your IRA. If the beneficiary of your trust is a second trust and that trust meets all of the foregoing requirements, the individuals named as beneficiaries in the second trust will qualify the trust.


Establishing a qualified trust as your IRA beneficiary allows the trustee to control the distribution of IRA funds after your death. Under IRS rules made in 2001, the trustee is only required to make certain minimum distribution of the IRA funds, which depend on the age of the beneficiaries. The trustee can refuse distributing more that the minimum to avoid early or unnecessary depletion of the IRA funds. Also, because the trust is revocable during your lifetime, you can revise the trust to meet changing circumstances, such as all of your children becoming adults and no longer having asset management needs.


Although the rules for establishing a qualified trust as your IRA beneficiary are fairly straightforward, using this estate planning technique adds a measure of complexity to managing your assets during your lifetime. You will incur accounting and legal fees to establish and maintain the trust that you would not otherwise incur. Also, if you fail to handle your assets as required by the trust, the law changes or a drafting error was made in the trust document, the trust may not qualify as a see-through or designated beneficiary trust for your IRA account. Whether such disadvantages out-weigh the potential benefit to such a trust depends on your particular circumstances.