Skip to Content

Trust as beneficiary( qualified trust)

Last Updated March 23, 2009

Definition

A trust that satisfies the requirements so as to be treated as a designated beneficiary. In sum, stretch distributions would be permitted, just as if an individual was the designated beneficiary

A trust is a qualified trust if it meets the following requirements:

  1. The trust is a valid trust under state law, or would be but for the fact that there is no corpus.
  2. The trust is irrevocable or will, by its terms, become irrevocable upon the death of the employee.
  3. The beneficiaries of the trust who are beneficiaries with respect to the trust's interest in the employee's benefit are identifiable
  4. The trust documentation, showing the designated beneficiary as of September 30 of the year follow the year of death,  has been provided to the plan administrator or IRA custodian/trustee by October 31 of the year following the year-of -death. There must be an agreement to provide the IRA custodian/plan trustee of any future  amendment made to the trust.  As an alternative to providing a copy of the trust, the following can be provided:
    •  A list of all of the beneficiaries of the trust (including contingent and remaindermen beneficiaries with a description of the conditions on their entitlement sufficient to establish that the spouse is the sole beneficiary) for purposes of section 401(a)(9);
    • A certification that, to the best of the participant’s knowledge, this list is correct and complete and that the requirements for the trust to be qualified ( as noted above( are satisfied  ;
    • An agreement that , if the trust instrument is amended at any time in the future, the participant will, within a reasonable time, provide to the IRA custodian/plan trustee corrected certifications to the extent that the amendment changes any information previously certified; and
    • An agreement to provide a copy of the trust instrument to the IRA custodian/plan trustee upon demand

The participant/beneficiary may look through a qualified trust and use the life expectancy of the oldest beneficiary to calculate RMD amounts.

Referring Cite

Treas. Reg. §1.401(a)(9)-4, Q&A-5

Additional Helpful Information

  • If there are multiple beneficiaries of the trust, the life expectancy of the oldest beneficiary must be used [Treas. Reg. 1.401(a)(9)-4, A-5(c)]
  • If the spouse of the participant is the sole beneficiary of the trust, the participant may apply the RMD calculations rules that would apply had the spouse been the direct beneficiary