You cannot put your individual retirement account (IRA) in a trust while you are living. You can state a trust beneficiary of your IRA and dictate how the assets are to be handled after your death. Trust beneficiaries rarely benefit from tax savings.

Should you name your trust as beneficiary of your IRA?

The IRA with its remaining assets does not pass under the terms of your will or trust, but instead passes to whomever you have named in the IRA beneficiary designation. However, a trust also can be named as an IRA beneficiary, and in many instances, a trust is a better option than naming an individual.

How do you name a trust in a beneficiary of an IRA?

There are several requirements to designate a trust as the beneficiary of your IRA.

1. It must be a valid trust under state law.
2. The trust must be irrevocable (or will become so upon your death)
3. The trust’s beneficiaries must be individuals.

Can you transfer an IRA to a revocable trust?

You can change the terms of a revocable trust. However, you can’t move an IRA into any trust since this requires you to make the trust the IRA owner. The IRS only allows you to designate a new IRA owner as part of a divorce settlement.

What happens when you name a trust as a beneficiary of an IRA?

Before naming a Trust as IRA beneficiary, however, you must understand the repercussions. By naming a Trust as IRA beneficiary you lose the spousal rollover and the ability to “stretch” the tax-deferment advantages across generations. When you name a spouse as your IRA beneficiary, he or she rolls the assets into their own IRA at death.

How can I put my IRA in a trust?

To gain the maximum stretch option of distributing the account, the trust needs to possess specific terms such as “pass through” and “designated beneficiary.”. If a trust does not contain provisions for inheriting an IRA, it should be rewritten or individuals should be named as beneficiaries instead.

Can a spouse roll over an IRA after death?

One choice your beneficiary may have after your death is to “roll over” your IRA. If your beneficiary is your spouse, he or she can roll the IRA over into a new IRA in their name. This, incidentally, is where the IRA/401 (k) (and etc.) distinction gets muddy; your spouse can roll your 401 (k) account over into a new IRA.

Can a spouse be the beneficiary of an IRA?

“By naming a Trust as IRA beneficiary you lose the spousal rollover and the ability to ‘stretch’ the tax-deferment advantages across generations.” The strategy of naming a spouse as beneficiary of your IRA allows your assets to grow tax-deferred for much longer than if the IRA had been left to a Trust .