Can Retirement Accounts Be Put in a Trust? SECURE Act Rules

Yes, retirement accounts can be put in a trust, but only by naming the trust as the beneficiary rather than transferring ownership during your lifetime. You keep the IRA or 401(k) in your own name while you’re alive, and the trust takes over when you die. The arrangement gives you control over how heirs receive the money, but it usually compresses the tax timeline and can push distributions into the highest federal brackets. A trust reaches the top 37% federal rate on ordinary income above roughly $16,250 in 2026, while a single individual doesn’t hit that rate until income exceeds $640,600.¹

When Naming a Trust Actually Makes Sense

If you name an individual directly, they receive the funds outright and can spend them as they choose. They can also lose the money to creditors, lawsuits, bankruptcy, or divorce. A trust puts a wall between the inherited account and those risks, and lets a trustee control the timing and purpose of distributions.

Trust structures are especially useful in a few recurring situations:

Blended families, where you want to provide income to a surviving spouse but guarantee the remaining balance passes to children from a prior marriage.
Minor children, so a trustee manages distributions until they’re old enough to handle a large sum.
Special needs beneficiaries, where a properly drafted trust can supplement support without disqualifying them from Medicaid or Supplemental Security Income.
Spendthrift concerns, where the trust can restrict distributions to specific purposes like education or medical expenses.

The trade-off never changes. You gain control and protection and accept a more complicated tax picture, an annual trust tax return, and often trustee fees calculated as a percentage of assets under management.

The See-Through Trust Requirement

A trust is not a person, so the IRS does not automatically treat it as a “designated beneficiary” for distribution purposes. To get that treatment, the trust must qualify as a see-through trust, which lets the IRS look through the trust to the individuals underneath and treat them as if they had been named directly.

IRS Publication 590-B sets out four requirements:

The trust must be valid under state law, or would be valid if it held assets.
The trust must be irrevocable, or must become irrevocable by its terms at the account owner’s death. A revocable living trust that locks down at death qualifies.
The individual beneficiaries must be identifiable from the trust document.
The trustee must deliver the required trust documentation to the IRA custodian or plan administrator.

That last item has a hard deadline. The trustee must provide the documentation by October 31 of the calendar year following the year the account owner died.² Miss the date and the trust can lose see-through status entirely.

Conduit Trust or Accumulation Trust

Once the trust qualifies, the next decision drives everything about the tax picture: does the trustee pass distributions straight through to the beneficiaries, or hold them inside the trust?

Conduit Trusts

A conduit trust requires the trustee to pass any distribution received from the retirement account directly out to the trust’s beneficiaries. Because the beneficiary receives the funds personally, they pay income tax at their own individual rate, which is almost always lower than the trust rate. The structure keeps things simple and avoids the compressed trust brackets.

The downside is that once the money leaves the trust, the protective shield is gone. It’s exposed to creditors, divorce, and poor spending decisions like any inheritance received outright.

Accumulation Trusts

An accumulation trust lets the trustee hold retirement distributions inside the trust rather than passing them through. That gives maximum asset protection and control. The trustee decides when, how much, and for what purpose funds reach beneficiaries.

The cost is steep. Any income retained inside the trust is taxed at trust rates. For 2025, a trust reaches the 37% federal bracket on ordinary income above $15,650.³ State income tax stacks on top in most states, making accumulated trust income one of the most heavily taxed categories in the code.

The choice is priorities. If tax efficiency matters most and the beneficiary is financially responsible, a conduit trust works. If the beneficiary needs protection from creditors, a divorcing spouse, or their own decisions, the accumulation trust’s tax penalty may be worth paying.

How the SECURE Act Shortened the Timeline

Before 2020, a beneficiary could stretch required minimum distributions from an inherited retirement account over their own life expectancy. Someone who inherited an IRA at age 30 could take small annual distributions for decades. The SECURE Act of 2019 eliminated that option for most beneficiaries and replaced it with a 10-year clock.⁴

The 10-Year Rule

Most non-spouse beneficiaries, including trusts with non-spouse beneficiaries, must empty the inherited account by December 31 of the year containing the tenth anniversary of the owner’s death. This applies whether the trust is a conduit or an accumulation structure.

One wrinkle catches people off guard. If the original account owner died after they had already reached their required beginning date, annual distributions are required during each of the ten years, not just a single withdrawal at the end. If the owner died before that date, no annual distributions are required during the window, though the account must still be empty by the end of year ten.

Eligible Designated Beneficiaries

The SECURE Act preserved the life-expectancy stretch for five categories, called eligible designated beneficiaries:

A surviving spouse of the account owner.
A minor child of the account owner, until the child reaches age 21, when the 10-year clock then starts.
A disabled individual, meaning someone unable to engage in any substantial gainful activity due to a physical or mental impairment expected to result in death or last indefinitely.⁵
A chronically ill individual.
Someone not more than 10 years younger than the deceased owner.

If a see-through trust’s beneficiaries all qualify as eligible designated beneficiaries, the trust can use the life-expectancy stretch instead of the 10-year rule.⁶ It’s the only remaining path to maximum tax deferral for a trust-owned inheritance.

The Oldest-Beneficiary Problem

When a see-through trust has multiple beneficiaries and hasn’t been divided into separate shares, the IRS calculates distributions based on the life expectancy of the oldest.⁷ That can wipe out the stretch for younger beneficiaries. Take a trust naming both a surviving spouse (age 70) and an adult child (age 40). The spouse qualifies as an eligible designated beneficiary; the child does not. The 10-year rule applies to the whole trust. Drafted instead with separate sub-trusts, the spouse’s share could use the life-expectancy stretch while the child’s share follows the 10-year rule independently. This is where drafting quality matters and generic templates fall short.

What Happens If the Trust Fails the Test

If the trust misses any of the four see-through requirements, the IRS treats it as a non-designated beneficiary and applies the least favorable schedule available.

If the owner died before the required beginning date, the entire account must be distributed within five years. No annual RMDs are required in those five years, but the account must be empty by December 31 of the fifth year.⁷
If the owner died on or after the required beginning date, distributions follow the deceased owner’s remaining life expectancy, which is typically shorter than a younger beneficiary would have received.

Either outcome accelerates the tax bill well beyond what a qualifying see-through trust would produce. On a $500,000 IRA, the difference can easily run into six figures of additional tax.

Roth IRAs Behind a Trust

Roth IRAs change the math. Qualified Roth distributions are income-tax-free, so the compressed trust brackets that punish accumulation trusts holding traditional IRA distributions become largely irrelevant. The 10-year rule still applies to most non-spouse beneficiaries, but emptying a Roth within ten years does not trigger income tax as long as the five-year holding period has been met.⁸

This makes a Roth one of the few situations where an accumulation trust works without a severe tax penalty. The trustee can hold distributions inside the trust, keep full asset protection, and pay out on a schedule that fits the beneficiary. Still, the trust brings its own annual return, trustee fees, and administrative work. If asset protection and control aren’t concerns, naming individuals directly on a Roth is simpler and cheaper.

Surviving Spouses Often Shouldn’t Be Behind a Trust

A surviving spouse who inherits a retirement account directly has options no one else gets. The most valuable is the spousal rollover: the spouse can roll the inherited IRA into their own IRA and treat it as always having been theirs. That resets the RMD clock entirely, and they can name new beneficiaries of their own.

When a trust is named as beneficiary instead, the spousal rollover disappears. The trust is the beneficiary, and the trust’s terms govern the money. Even if the spouse is the sole beneficiary of the trust, distributions must follow the trust’s RMD schedule rather than the more favorable rules available to a spouse who inherits outright.

For many married couples, naming a trust as the retirement account beneficiary is the wrong move. The situations where it does make sense usually involve blended families where the account owner wants remaining funds guaranteed to children from a prior marriage, or cases where the spouse has creditor exposure or diminished capacity that makes outright ownership risky.

ERISA Spousal Consent for 401(k)s

Federal law adds a procedural step for employer-sponsored plans. Under ERISA, a surviving spouse is automatically entitled to receive plan benefits when the participant dies. To name a trust or anyone other than the spouse, the spouse must sign a written waiver consenting to the alternate designation, witnessed by a notary or a plan representative.⁹

This applies to 401(k)s, 403(b)s, and most other employer-sponsored defined contribution plans. It does not apply to IRAs. A designation naming a trust without proper spousal consent is invalid, and the plan will pay the surviving spouse regardless of what the form says.

Setting Up the Designation and Handling It After Death

Before the Account Owner’s Death

Check with the custodian or plan administrator first. Not every plan accepts trusts as beneficiaries, and employer-sponsored plans in particular may have restrictions. Once the plan allows it, complete the beneficiary designation form using the trust’s full legal name, the date it was executed, the trustee’s name, and the trust’s tax identification number if one exists. Avoid generic descriptions like “my living trust,” which create problems during post-death administration.

The trust document itself has to be drafted to meet the four see-through requirements. If it will have multiple beneficiaries, ask the drafter to create separate sub-trusts for each to avoid the oldest-beneficiary rule. The document should also specify whether it operates as a conduit or accumulation trust for retirement distributions. This is specialized drafting that goes well beyond a standard revocable living trust.

After the Account Owner’s Death

The successor trustee should notify the custodian promptly and obtain a new taxpayer identification number for the trust if one hasn’t already been assigned. Deliver the required trust documentation to the custodian by October 31 of the year after the owner’s death.²

From there, the trustee starts distributions under the applicable rule: the 10-year rule for most non-spouse beneficiaries, or life-expectancy distributions if the beneficiaries qualify as eligible designated beneficiaries. The trustee is responsible for calculating each year’s distribution, filing the trust’s annual Form 1041, and either passing income out to beneficiaries or paying the trust-level tax on what accumulates.

Correcting a Missed RMD

Missing a required minimum distribution triggers a 25% excise tax on the amount that should have been withdrawn.¹⁰ The penalty drops to 10% if the shortfall is corrected within two years.

To request a waiver, the trustee files Form 5329 with the trust’s return, attaches a written explanation of reasonable cause, and shows that the shortfall has been fixed. The IRS has discretion to waive the penalty entirely if the explanation is convincing.¹¹ A trustee who discovers a missed RMD should take the distribution immediately and work with a tax advisor to file the correction before the two-year window for the reduced 10% penalty closes.

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
2
Internal Revenue Service. Private Letter Ruling PLR-113361-18
3
Internal Revenue Service. 2025 Instructions for Form 1041 and Schedules A, B, G, J, and K-1
4
House Ways and Means Committee Democrats. Summary of the Setting Every Community Up for Retirement Enhancement Act of 2019
5
Office of the Law Revision Counsel. 26 US Code 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
6
Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
7
Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs)
8
Internal Revenue Service. Retirement Topics – Beneficiary
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U.S. Department of Labor. FAQs About Retirement Plans and ERISA
10
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
11
Internal Revenue Service. Instructions for Form 5329 (2025)