Planning your estate is personal. It isn’t just about money or documents. It’s about the people you care about and what will happen to them after you’re gone. One of the common questions people ask is, “Can you put retirement accounts in a trust?” The answer isn’t simple, and doing it the wrong way could have serious consequences for your family.
In this blog, you’ll learn how Virginia treats retirement accounts in estate planning, whether you can name a trust as a beneficiary, and what to watch out for when making these decisions.
Can You Put a Retirement Account Into a Trust?
Transferring a retirement account like an IRA or 401(k) into a trust during your lifetime is usually not recommended. Doing so would trigger a taxable event, since these accounts are tied to you as an individual and offer tax-deferred or tax-free growth. Transferring ownership to a trust is considered a distribution by the IRS. That could mean:
- Immediate income tax liability
- A 10% early withdrawal penalty if you’re under age 59½
However, you can name a trust as the beneficiary of your retirement account. When you pass away, the account will transfer to the trust, not directly to a person. This allows the trust to control how and when the money is distributed.
When Naming a Trust as Beneficiary Makes Sense
There are several reasons you might choose to name a trust as the beneficiary of your retirement accounts:
- You have minor children or young adult beneficiaries
- You’re providing for someone with special needs
- You’re in a blended family
- You want to protect assets from creditors or poor spending habits
- You want to avoid probate and keep the terms of the trust private
For example, suppose you leave your IRA directly to your 19-year-old child; they could take the full amount immediately and spend it however they like. But if your trust is the beneficiary, the trustee controls the timing and purpose of the distributions.
In the case of a special needs beneficiary, a properly drafted special needs trust can receive retirement account distributions without affecting the person’s eligibility for benefits like Medicaid or SSI. For example, suppose you name a special needs trust as the beneficiary of your $500,000 IRA, the trustee can distribute funds for your disabled child’s medical expenses without affecting their Medicaid or SSI eligibility, unlike a direct inheritance.
How the SECURE Act Changed Inherited Retirement Accounts
Congress passed the SECURE Act in 2019, and it was supplemented by the SECURE Act 2.0 in 2022. The SECURE Act introduced the 10-year withdrawal rule for most non-spouse beneficiaries, while SECURE 2.0 raised the required minimum distribution (RMD) age to 73 (or 75 for those born after 1960), impacting trust planning. These laws changed how inherited retirement accounts work for most non-spouse beneficiaries.
Before the SECURE Act, beneficiaries could stretch distributions over their lifetime. Now, most must withdraw the full amount within 10 years. That can lead to a hefty tax bill, especially if the distributions push the beneficiary into a higher income bracket.
Exceptions to the 10-Year Rule
Certain individuals still qualify for lifetime “stretch” treatment:
- Your surviving spouse
- Your minor child (until they reach age 21, applicable only to your own children, not grandchildren or stepchildren)
- A disabled or chronically ill beneficiary
- A beneficiary less than 10 years younger than you
What About Trusts?
To get favorable tax treatment, a trust must meet the IRS definition of a “see-through” trust:
- It must be valid under state law
- It must become irrevocable upon your death
- Its beneficiaries must be identifiable
- A copy must be given to the plan administrator by October 31 of the year following your death
If your trust doesn’t meet these requirements, the retirement account could be taxed in as little as five years if you died before your required beginning date for RMDs (age 73), or immediately if you die after that date.
Steps to Protect Your Retirement Accounts
- Review retirement account beneficiary designations.
- Consult an attorney to select the appropriate trust type.
- Draft the trust to meet IRS “see-through” requirements.
- Coordinate the trust with your will and other estate documents.
- Submit trust documentation to the plan administrator by October 31 of the year following death.
Choosing the Right Type of Trust for Retirement Assets
Different types of trusts offer different benefits, and each must be carefully drafted if you want to name it as a beneficiary of a retirement account.
Revocable Living Trust
A revocable living trust is popular for avoiding probate and keeping your estate private. You retain control during your lifetime, and it becomes irrevocable after your death.
Irrevocable Trust
An irrevocable trust can protect assets from creditors and may reduce estate taxes, but it’s more complex. These trusts are subject to higher tax rates and strict distribution rules. They may also involve trustee fees and tax preparation costs, which should be weighed against their benefits.
Conduit Trust
A conduit trust requires the trustee to pass required distributions directly to beneficiaries. This can help the trust qualify for favorable tax treatment, but it limits your control over the timing or use of the funds. Conduit trusts ensure tax compliance but may not suit complex family needs.
Accumulation Trust
An accumulation trust allows the trustee to hold the retirement distributions within the trust and manage them. This provides more control and asset protection but may result in higher taxes. Accumulation trusts face compressed tax brackets (e.g., 37% at $14,450 of income in 2025), unlike individual beneficiaries.
Special Needs Trust
A Special Needs Trust is used to provide for a disabled beneficiary without disrupting their access to government benefits. A retirement account can fund a special needs trust—but it must be structured properly.
Charitable Remainder Trust (CRT)
This is a complex tool for higher-net-worth individuals. It pays income to your chosen beneficiary for life or a set period and donates the remainder to charity. This structure can offer tax advantages and support charitable goals. CRTs typically require significant assets (e.g., $100,000+) to justify setup costs and provide a partial charitable deduction.
Retirement Accounts and the Probate Process in Virginia
When you name an individual or a trust as your retirement account beneficiary, those assets pass outside of probate under Virginia law. (See Va. Code § 64.2-100).
That said, if your estate plan isn’t coordinated, things can still go wrong. Your IRA beneficiary form controls who inherits the account, even if your trust or will names different heirs. For example, if your trust stipulates that your children each get 50%, but your IRA beneficiary form only names one of them, the trust language doesn’t apply. The IRA will go entirely to the beneficiary named on the form.
Common Mistakes to Avoid
Here are some of the most common and costly mistakes people make:
- Naming the wrong type of trust as a beneficiary
- Failing to update your beneficiary forms after a life event
- Using a boilerplate trust that doesn’t address retirement accounts
- Overlooking the tax hit of accelerated distributions
- Not submitting trust documentation to the plan administrator
- Assuming a trust is always better than leaving the account directly to a spouse
If you name your spouse directly as the IRA beneficiary, they can roll the account into their own IRA and delay RMDs until age 73 (or 75 if born after 1960), reducing tax liability and allowing continued tax-deferred growth. That option isn’t available to a trust.
Coordinating Your Estate Plan in Fairfax and Northern Virginia
Whether you’re in Fairfax County or another part of Northern Virginia, you want to make sure all your estate planning documents work together. That means:
- Reviewing your will, trust, and beneficiary forms regularly
- Coordinating with your powers of attorney and advance directives
- Checking whether your estate will be subject to federal estate tax
- Talking with an attorney about family dynamics, tax planning, and long-term goals
Virginia does not have a state estate tax. But federal rules still apply, and the exemption is $13.99 million per individual in 2025 but is scheduled to drop significantly after 2025 unless Congress acts.
How a Trusts Attorney Can Support Your Goals
A Virginia trusts attorney can help you:
- Review your accounts and determine whether a trust is the right beneficiary
- Draft trust provisions that meet IRS see-through rules and Virginia’s Uniform Trust Code (Va. Code § 64.2-700), which requires clear intent and identifiable beneficiaries
- Coordinate your trust, will, and retirement accounts
- Avoid triggering unnecessary taxes or legal disputes
In Virginia, trusts must follow the Uniform Trust Code. That means they must be properly drafted and valid under state law to be effective.
Not Sure How to Handle Your IRA or 401(k) in a Trust? We Can Help
Your retirement accounts are a significant part of your legacy. Whether you’re building your first estate plan or updating it to reflect life changes, it’s worth taking a closer look at how those accounts will pass to your family.
At PJI Law, we work with individuals and families across Fairfax and Northern Virginia to develop customized estate plans that protect what matters most. If you’re considering naming a trust as the beneficiary of your IRA or 401(k), our legal team can review your documents and help you avoid costly mistakes.
Your online search for “attorney for trust” or “estate planning lawyers near me” brought you here. Now take the next step. Call (703) 865-6100 or fill out our confidential online form to schedule a consultation.
From your first conversation with us, you’ll receive responsive communication, clear explanations, and solutions built around your goals. At PJI Law, we don’t offer one-size-fits-all estate planning services. We create estate plans that reflect your life, your family, and your future.
At PJI Law, you’ll receive white glove service and personalized attention!
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The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.
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