Transferring Retirement Accounts to Your Trust

Transferring the ownership of a retirement plan to a Trust isn't usually necessary and might lead to unfavorable tax implications. Instead, it's crucial to focus on the distribution of the proceeds by designating a beneficiary.

Naming a Beneficiary vs. Transferring Retirement Funds to a Trust

Rather than changing the ownership of the retirement plan to the Trust, you can designate a plan beneficiary to receive the proceeds at your death. As with life insurance, a common consideration is whether you want the proceeds paid directly to the plan beneficiary or whether you want the proceeds to go to the Trust where you have more control on when and how the proceeds are distributed.

Who should I name as a beneficiary for my retirement plan?

A common strategy involves naming your spouse as the primary beneficiary for your retirement plan and the Trust as the alternate beneficiary. This ensures that your spouse benefits directly, while the Trust acts as a backup, providing controlled distribution if needed.

Your tax advisor should be able to help determine the best option for you and your particular tax circumstances. 

How to Add a Beneficiary to Your Retirement Plan

Each retirement plan administrator requires its own Beneficiary Designation forms. Contact your plan administrator to gather more information and request the necessary forms to update your Beneficiary designation.

 

Learn more with this short video about retirement accounts and Trusts:

More Resources

View, download, or print our comprehensive guide to funding your Trust: Trust Funding Guide

Learn more about transferring various asset types to your Trust: Funding Your Trust: How to Transfer Assets to a Trust

 

This information is intended as a reference only. It is not legal advice nor intended to cover every possible situation. Please consult an attorney if you have specific questions. Some details for funding your Trust may change over time. For example, if the Trustee changes, that would likely affect how you would title assets held in the Trust.

Was this article helpful?
23 out of 23 found this helpful