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Trust Me, You’re Gonna Like This – The See-Through Trust as a Beneficiary


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One area that often gets short shrift in discussions of IRAs and beneficiary designation is the use of a trust as the beneficiary. Part of the reason behind this may be the perceived complexity of trusts in general; at any rate, it’s not as complicated as it sounds, and it can be beneficial, depending upon your circumstances. We’re specifically discussing the “see-through” trust here, as this type of trust is most appropriate for IRA and Qualified Retirement Plan beneficiary designations.

The See-Through Trust as a Beneficiary

If you designate a trust as the beneficiary of your IRA or Qualified Retirement Plan (QRP), the trust should be set up with certain properties associated with it:

  • the trust must be valid under the plan owner’s state’s law;
  • the trust must be irrevocable upon the plan owner’s death;
  • the trust beneficiaries must be identifiable;
  • ALL of the trust beneficiaries must be individuals (cannot be another trust); and
  • the trust documentation must be delivered to the plan administrator or custodian by October 31 of the year following the year of death of the plan owner.

Taken together, these properties describe a “see-through” or “look-through” trust. Other types of trusts could be eligible as beneficiaries, but the see-through trust provides the ability to enact a rollover (a trustee-to-trustee transfer) to an inherited IRA for the benefit of the individual beneficiaries, if there are multiple beneficiaries. With this ability, your beneficiaries can split out the IRA into separate inherited IRAs and stretch out the payments over each beneficiary’s individual lifetime, rather than all beneficiaries having to use the oldest beneficiary’s lifetime for Required Minimum Distribution (RMD) calculations.


You might want to use a trust as your beneficiary because it is much simpler to make changes to the trust documents than to file additional beneficiary designation forms with your plan administrator. The trust also provides for additional flexibility. For example, if you wanted your IRA to be distributed to your three children, and in the event of one or more of your children’s pre-deceasing you then you’d like that child’s share to be apportioned equally among the heirs of that child – and so on, and so on. This sort of language doesn’t always fit in very well with the standard IRA beneficiary designation form, but a trust could quite easily describe this situation ad infinitum.

In addition, you might want to include certain provisions in a trust to carry out your wishes. For example, you might want to include a spend-thrift provision, which could control the amount of distributions over a specified schedule, rather than a lump-sum distribution.

Other provisions could ensure that, for example, children from a previous marriage will receive benefit from the account, in addition to a current spouse. This is often handled by way of a QTIP trust.


  1. Jerry says:

    It would be less complex to open a Trusteed IRA rather than a custodial-only IRA with a trust as beneficiary as you describe. Moreover, a Trusteed IRA permits each beneficiary to preserve their individual stretch provisions unlike the scenario you describe.

    1. jblankenship says:

      There are many ways to skin a cat.

      I don’t disagree, a trusteed IRA can be less complicated, but there can be drawbacks as well. Neither type of handling of this situation is perfect for all purposes.

    2. sgrimes08 says:

      It is even easier still to open multiple IRA accounts with separate beneficiaries.

      1. jblankenship says:

        Depends on the circumstances. Typically setting up multiple IRAs would have a much cleaner final outcome, for sure. Less interaction with anything external to the IRA account(s), less overhead.

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