1. An IRA Trust is Called a “Qualified Retirement Plan Trust”
What is an IRA Trust and Why do you Want one?
An IRA Trust is Called a “Qualified Retirement Plan Trust”
The trust can be used to capture assets from:
IRA accounts, 401k’s 403b’s or any qualified plan
If set up correctly, the trust is a “see through” trust for tax purposes – meaning the IRS sees through the trust to the beneficiaries.
Why do you want one?
Generally people name their spouse as primary beneficiary of retirement accounts and their heirs as secondary beneficiaries.
This could be a huge mistake. A spouse who inherits a lump sum of qualified assets may: defer paying taxes on the until age 70 ½ - or exhaust them. They are free to name anyone they wish as their beneficiary, in effect disinheriting your children. I.e. - remarriage
Likewise a non spouse beneficiary can exhaust the account or leave it to a non family member.

2. General Issues
Leaving a modest IRA to a spouse or child is not an issue
Leaving a large IRA exposes the beneficiary to mismanagement
Although the beneficiary of an inherited IRS does NOT pay a penalty for pre 59 ½ distributions, they will pay income taxes at their highest marginal rate.
Having third party oversight can avoid the early dissipation of your assets
If a child dies they may leave money to a spouse they are no longer married to.
The adverse consequences of having a large IRA are endless

3. The Solution
Create a Qualified Retirement Plan Trust to capture all your retirement plan assets wherever they are now
Name whomever you wish as beneficiaries in the order you wish, i.e, spouse first, children second
Beneficiaries have no ability to name their own beneficiaries allowing you to control your assets from the grave
Sub trusts may be created to utilize the life expectancy of each beneficiary for purposed of calculating their required minimum distributions (RMD)
The trustee is required to make at least the minimum distribution and will be the one managing the assets.
The RMD for a 5 year old is much smaller than a 70 year old allowing them to potentially grow their portion, tax deferred over their entire lifetime

4. General Housekeeping
There are highly complex rules that must be followed
Fortunately the IRS has laid out the requirements for this type of trust.
You cannot put an IRA or other retirement account into a trust while you are alive without triggering a tax on the entire amount
You must modify the current beneficiary designations to name the trust or sub trust
You may revoke this trust or modify any time up until your death
The U.S. Supreme Court has ruled that inherited IRA’s are NOT subject to the same protection as an original IRA – a trust resolves this