If you want to leave an IRA to someone after you die, your best bet is to name them as a successor beneficiary. IRA beneficiaries inherit your account upon your death.

Now, whether you should name a trust as a beneficiary on your IRA depends. If you have trust, a lot of factors come into play.

To learn more about whether or not you should place your IRA in a trust, read on.

Protection from Creditors

Trusts can provide a great way to protect your IRA from creditors. It also provides an extra layer of asset protection by placing your retirement funds in an irrevocable trust. If a potential creditor were to become involved in legal matters, a trust would ensure that the money in your IRA is not available to them.

The trust will also protect it from any claims that may be brought against you in the future. You can ensure that any proceeds from your IRA are distributed in accordance with your wishes, ensuring that the money isn’t disqualified from any income-based tax breaks.

Control Over Distribution

If you are looking for control over how and when your IRA is distributed, putting your IRA in trust might be a good option for you. Trusts allow you to set specific conditions in order to control when and how your IRA is distributed.

Reputable professionals like this trust company also allow you to specify who will benefit from the IRA and determine how much they will receive.

They also help protect your IRA from creditors, help guarantee that your legacy is preserved, and can allow you to avoid some of the tax consequences that could arise from distributions of large-sum IRAs.

Tax Implications

When considering whether to put your IRA in a trust, there are important tax implications to consider. With a trust, the contribution of funds from a traditional IRA may be subject to gift taxes.

Additionally, an IRA trust may not be eligible for contributions that are often tax deductible for an IRA, including rollover contributions and contributions for spouses.

Income generated by the assets in an IRA trust is generally subject to federal income tax and can also be subject to state income taxes and the federal alternative minimum tax.

Finally, distributions are still subject to the 10% penalty for withdrawals before age 59 ½. For these tax implications, consulting a qualified tax professional can help you determine if an IRA trust is beneficial for you.


Depending on the type of trust you choose, the cost of creating and setting up the trust can vary. Setting up a self-directed trust through a third-party administrator can often range from a few hundred dollars to several thousand dollars. If you choose to use an attorney to create the trust, the cost might be higher.

Additionally, you will be responsible for any annual fees associated with maintaining the trust. This includes any custodian, administrative and legal fees. Many financial advisors suggest that the cost and complexity of administrating a trust only pencil out if you possess a significant amount of retirement assets.

Put Your IRA in a Trust Today

When considering whether you should put your IRA in a trust, be sure to weigh the pros and cons. Ultimately, you should make a decision based on your own risk tolerance and goals.

If you have more questions or would like more advice, contact a financial advisor to develop a tailored strategy.

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