Can you put a 401(k) or IRA in a trust?

The direct answer: not during your lifetime

People arrive at this question from a sensible place. An estate attorney has just funded a revocable living trust with the house, the brokerage account and the bank accounts, and the natural next thought is: what about the biggest asset on the balance sheet, the 401(k) and the IRA? The answer is that those two cannot go in, and the attorney is not being lazy by leaving them out.

There is no mechanism to change the owner of a retirement account from you to a trust. No custodian offers it, no plan administrator will process it, and there is no form. If you force the issue by withdrawing the balance and depositing it into the trust, you have not moved an account — you have taken a distribution. The whole pre-tax balance becomes ordinary income in that year, at the top of your income stack, plus state tax, plus the 10% additional tax on early distributions if you are under 59½. On a $600,000 IRA that is not a technicality; it is a six-figure mistake with no undo button.

Why the law is built this way

Two separate statutes, one for each account type, and they arrive at the same place from different directions.

IRAs are individual by definition. IRC §408(a) defines an individual retirement account as "a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries." Read that carefully: an IRA is already a trust, and the exclusive beneficiary of that trust is one living human being. That is why there is no joint IRA, no jointly-titled Roth, and no trust-owned IRA. Putting your IRA inside another trust would violate the exclusive-benefit requirement that makes it an IRA in the first place. There is one narrow statutory exception to the no-transfer rule and it is not estate planning: under §408(d)(6), an IRA can be transferred to a spouse or former spouse under a divorce or separate maintenance decree without tax.

401(k) benefits cannot be assigned. A 401(k) sits inside a plan qualified under §401(a), and §401(a)(13) — mirrored by ERISA §206(d) — says the plan must provide that benefits "may not be assigned or alienated." That anti-alienation rule is the same protection that keeps your 401(k) out of reach of creditors and out of a bankruptcy estate. It also keeps it out of your trust. The only recognised carve-out is a qualified domestic relations order in a divorce.

So the honest framing is this: the asset protection people hope to gain by moving a retirement account into a trust is, in large part, already there. What a trust adds is not protection during your life. It is control after your death.

What you can do: the trust as beneficiary

You can absolutely name a trust on the beneficiary form. Custodians accept it routinely, and for 401(k) plans the form is the controlling document — the beneficiary designation overrides your will, which is the single most-missed fact in this whole area and the reason what happens to a 401(k) when you die is worth reading alongside this page.

One ERISA wrinkle applies to the 401(k) and not to the IRA. Under §401(a)(11) and §417, a married participant's surviving spouse is the automatic primary beneficiary of a qualified plan unless the spouse consents in writing to someone else — including to a trust — with the signature witnessed by a plan representative or a notary. You cannot name a trust as the primary beneficiary of a 401(k) over your spouse's head. IRAs have no such federal requirement, although community property states impose their own.

Once the trust is named, the tax question becomes: who does the IRS treat as the beneficiary — the trust, or the people behind it? That single question decides how fast the account must be emptied, and it is answered by the see-through rules below.

When a trust beneficiary is worth it

Naming a trust always costs something: drafting fees, an annual Form 1041, a trustee, and usually a worse tax outcome than leaving the account to a person outright. It buys control. The test is whether you actually need the control.

• Minor children. A minor cannot own an inherited IRA outright; without a trust you get a court-supervised guardianship and, at 18 or 21, a lump sum handed to a teenager.
• A beneficiary with a disability. An inherited IRA paid outright can disqualify someone from Medicaid or SSI. A properly drafted special needs trust preserves the benefits, and the tax rules give this case favourable treatment through the applicable multi-beneficiary trust provisions.
• Second marriages. The classic use: support your surviving spouse for life, then direct the remainder to children from a first marriage. A beneficiary form cannot do that. A trust can.
• Spendthrift, addiction or creditor exposure. An inherited IRA in a beneficiary's own name has weak federal creditor protection — the Supreme Court held in Clark v. Rameker (2014) that inherited IRAs are not "retirement funds" in bankruptcy. A trust with spendthrift terms restores that shield.
• Very large accounts where you want distributions staged rather than dropped in one piece.

If none of those apply — competent adult beneficiaries, ordinary family circumstances — naming the people directly is almost always better. They get an inherited IRA, full control of timing inside the ten-year window, and tax at their own brackets. Read the inherited IRA RMD rules for what that path actually looks like.

See-through trust rules, precisely

Here is the sentence that surprises everyone: a trust cannot be a designated beneficiary even if it is a named beneficiary — that is the IRS's own wording in Publication 590-B. A trust is not a person, and the post-SECURE payout rules are built around people. Left there, a trust beneficiary would land in the worst category available.

The look-through rules in Reg. §1.401(a)(9)-4(f) — rewritten in the final regulations at T.D. 10001 (89 FR 58907, July 2024) and applicable to distribution calendar years from 2025 onward — fix that. If four requirements are met, the IRS looks through the trust and treats certain of its beneficiaries as the designated beneficiaries of the account.

1. The trust is valid under state law, or would be but for having no corpus.
2. The trust is irrevocable, or becomes irrevocable by its terms on your death. A revocable living trust satisfies this the moment you die, which is why revocable trusts are perfectly acceptable IRA beneficiaries.
3. The beneficiaries are identifiable from the trust instrument — the trustee must be able to name every person who could receive a share of the retirement money.
4. Documentation is delivered to the plan administrator or IRA custodian: either the trust instrument or a certified list of beneficiaries, by October 31 of the calendar year following the year of death (Reg. §1.401(a)(9)-4(h)).

Two further traps. If a charity or the estate can receive any part of the retirement money through the trust, the look-through can be contaminated by a non-individual beneficiary — the standard fix is to keep charitable gifts on a separate, directly-named share. And the separate account rules cannot be used by beneficiaries of a trust unless the trust is an applicable multi-beneficiary trust, so several beneficiaries inside one trust generally share a single schedule rather than each getting their own.

Conduit versus accumulation

Every see-through trust is one of two things, and the regulation defines them cleanly. A conduit trust is one whose terms require that all distributions from the retirement account, on receipt by the trustee, be paid directly to or for the benefit of specified beneficiaries. An accumulation trust is any see-through trust that is not a conduit trust — meaning the trustee may hold the money inside the trust.

Note the uncomfortable interaction with the SECURE Act. Before 2020, a conduit trust for a young beneficiary released only a small annual life-expectancy payment — the trust really did control the pace. Under the ten-year rule the entire account must be out within a decade, so a conduit trust now functions as a ten-year delay rather than a lifetime one. For the precise mechanics of that window, including which beneficiaries owe annual amounts inside it, see the inherited IRA RMD rules. That single change is why accumulation trusts have become far more common — and why the tax trap below matters so much more than it used to.

The accumulation-trust tax trap

Trusts are taxed on a bracket structure that reaches the top rate almost immediately. This is deliberate — Congress compressed the brackets in 1986 specifically to stop taxpayers parking income in trusts. It is also the single largest cost of an accumulation trust, and it is routinely underestimated at the drafting stage.

Read the two right-hand columns against each other. A trust reaches the 37% bracket at $16,000 of taxable income; a single individual does not reach it until $640,600. The gap is a factor of forty. An inherited IRA is ordinary income in respect of a decedent, so every dollar an accumulation trust withdraws and keeps climbs that ladder at speed. Take $120,000 out of an inherited IRA in one year and hold it in the trust, and roughly $104,000 of it is taxed at 37% — where the same $120,000 in the hands of an adult child earning $90,000 would top out at 24%.

The mechanism that saves you is the distribution deduction. Under §§651 and 661, income the trust distributes to beneficiaries in the same tax year is deducted by the trust and reported by the beneficiary on a Schedule K-1, taxed at the beneficiary's rates. That is precisely what a conduit trust does automatically, and what a well-run accumulation trust does deliberately when there is no reason to hold the money. The 65-day rule in §663(b) lets a trustee treat distributions made within the first 65 days of a year as if made on the last day of the prior year — a genuine, and widely forgotten, cleanup tool.

Two further notes. Distributions from a qualified plan or an IRA are excluded from net investment income under §1411(c)(5), so the IRA money itself is not hit by the 3.8% surtax — but interest, dividends and gains earned on the proceeds after the trust retains them are, and undistributed net investment income above $16,000 in 2026 is exposed. And where federal estate tax was paid on the account, the §691(c) deduction for income in respect of a decedent is a real, frequently missed offset. For how withdrawal timing drives the total bill, see how retirement distributions are taxed.

The revocable living trust special case

This is where most of the confusion originates. You set up a revocable living trust to avoid probate, and your attorney's funding checklist retitles the house, the taxable brokerage account, the bank accounts and the LLC interests into the trust's name. The 401(k) and the IRA are conspicuously absent, and it looks like an oversight.

It is not. Retirement accounts cannot be retitled, for the reasons above, and they do not need to be. The purpose of funding a revocable trust is to keep assets out of probate, and a retirement account with a valid living beneficiary named on it already bypasses probate. It passes by contract, directly, faster than the trust does. Funding it into the trust would add nothing and cost everything.

So the correct handling of a 401(k) or IRA in a revocable-trust plan is one of two things:

• Name the people directly on the beneficiary form and leave the trust out of it. This is right for most families.
• Name the revocable trust as beneficiary where you need the control described above. The trust becomes irrevocable at your death, which satisfies requirement two of the see-through test — so a revocable living trust is a perfectly valid IRA beneficiary, provided the retirement-specific language is in it.

The spousal rollover you can quietly destroy

This deserves its own warning because it is the most valuable thing a trust can accidentally take away.

A surviving spouse who inherits an IRA directly has an option nobody else has: treat it as their own. That resets the account to the spouse's own name, restores the Uniform Lifetime Table, delays required distributions until the survivor's own required beginning date, and lets them name a fresh set of beneficiaries. Over a long survivorship it is worth a great deal.

But Pub. 590-B sets the condition plainly: a surviving spouse is only considered to have chosen to treat the IRA as their own if they are the sole beneficiary of the IRA and have an unlimited right to withdraw amounts from it. Name a trust and the trust is the beneficiary — not the spouse. The distribution is payable to the trustee, so the spouse is not the payee and cannot use the 60-day rollover either. The IRS has permitted spousal rollovers through a trust in private letter rulings where the spouse was the sole trustee and sole beneficiary with an unfettered withdrawal right, but a PLR may not be cited as precedent by anyone else under §6110(k)(3), and obtaining your own costs time and a user fee.

The practical rule: do not route an IRA to your spouse through a trust unless you have a specific reason that outweighs the rollover — a second marriage, a remainder you need to protect, or a spouse who genuinely cannot manage the money. If you do have that reason, price what the lost rollover costs before you sign.

Alternatives worth pricing first

• Name individuals outright. The default, and usually the best. Each beneficiary gets their own inherited IRA, their own ten-year window, and taxation at their own rates. Run the numbers with the inherited IRA RMD calculator before assuming a trust improves on it.
• A trusteed IRA. The custodian serves as trustee of the IRA itself under §408(a), with post-death distribution instructions written into the account rather than into a separate trust — no drafting fee, no Form 1041, no October 31 documentation problem. The trade-off is rigidity and shrinking availability. See what a trusteed IRA is and when it beats a trust.
• Split the beneficiary form. You rarely need one answer for everyone. Name the responsible adult child directly, a trust for the minor grandchild, and a charity on its own separate share so it cannot contaminate the look-through for anyone else.
• Convert to Roth during your lifetime. Paying the tax at your own rates while alive removes the accumulation-trust bracket problem entirely — the trust inherits an account whose distributions are generally tax-free. See Roth conversion strategy.
• Leave the pre-tax IRA to charity and the Roth or taxable assets to the trust. A charity pays no income tax on an inherited IRA; a trust at 37% pays a great deal. Sorting assets by the tax character of the recipient is the cheapest planning available.

If you are going ahead

1. Have the trust drafted by an estate attorney with a retirement-benefits article — not a generic revocable trust and not an online template. Decide conduit or accumulation explicitly, in writing.
2. Scrub the remainder beneficiaries. Follow every path the retirement money could take and confirm no charity, estate or non-identifiable person sits behind it. Check the debts-and-expenses clause.
3. Complete the beneficiary form correctly. Name the trust by its exact legal name and date, and get spousal consent in writing and notarised if it is a 401(k) and you are married.
4. Write the October 31 deadline into the trust document itself, so the successor trustee learns about it from the instrument rather than from a rejection letter.
5. Give the trustee a distribution policy. An accumulation trust that never distributes is a tax accident; tell the trustee when to use the distribution deduction and the 65-day rule.
6. Re-check after every life event — a marriage, a divorce, a death, a rollover to a new custodian. A rollover starts a new account with a blank beneficiary form more often than anyone expects.

Trust drafting is state law and this page is not a substitute for an estate attorney or a CPA. Figures are 2026 federal amounts from IRS Rev. Proc. 2025-32; state income tax on trusts varies widely and can add materially to the numbers above.