Retirement accounts take years to build, and passing them on isn’t always simple. Trusts can provide control, creditor protection, and ensure funds last, while keeping families tax-compliant under evolving rules. BENEFITS OF NAMING A TRUST AS BENEFICIARY Here are three essential reasons to consider naming a trust as the beneficiary of your IRA or 401(k). 1. Control Distributions: A living trust allows you to establish rules for how and when retirement funds are distributed, which is particularly beneficial if the beneficiaries are minors, have special needs, or struggle with managing money responsibly. 2. Provide Clarity for Blended Families: You can specify exactly who receives what, ensuring children from a previous marriage or other heirs are protected according to your wishes. 3. Support Tax-Efficient Planning: For high-net-worth individuals, a living trust can play a crucial role in minimizing estate taxes and preserving wealth for future generations. 401(K) TRUST BENEFICIARY ADVANTAGES: COMMON ISSUES A TRUST CAN FIX Retirement accounts left to heirs often create complications that a trust can prevent: • Minor Children: Minors can’t directly inherit IRAs, requiring a court guardian, but a trust lets you appoint a trustee and avoid court involvement. • Blended Families: If you want a spouse to receive income during their lifetime and your children to inherit the remainder, a trust clearly outlines the terms and timing. • Spending Control: Beneficiaries may quickly deplete inherited accounts under the 10-year payout rule. A trust allows you to set distribution schedules that preserve assets. • Creditor Protection: Inherited IRAs lack the federal bankruptcy protections of personal IRAs, but a trust can shield assets and help keep funds in the family. IRA TRUST BENEFICIARY TAX IMPLICATIONS UNDER THE SECURE ACT The SECURE Act generally requires inherited IRAs to be distributed within 10 years, but trusts, properly drafted as conduit or accumulation, can protect assets and preserve tax benefits for certain beneficiaries. Avoid Inheritance Pitfalls How a Trust Can Safeguard Your IRA or 401(k)
Did You Know? Did you know … the world is packed with wild opposites that may completely flip your expectations? Bananas are berries, but strawberries aren’t. In botanical terms, bananas count as
berries, while strawberries do not. It’s the opposite of what almost everyone assumes!
Hot ice exists. There’s a substance called hot ice (sodium acetate trihydrate) that looks frozen solid but feels warm when crystallized.
There’s a “negative” temperature that’s actually hotter than any positive temperature. In physics, systems with inverted energy states can drop below absolute zero, which makes them hotter than any system above zero. Cats purr when happy … and when stressed. The soothing sound can signal polar-opposite emotions.
FINDING THE RIGHT TRUST STRUCTURE FOR YOUR IRA OR 401(K) Different trust types handle distributions differently:
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• Conduit Trust: Passes IRA or 401(k) withdrawals directly to the beneficiary, minimizing taxes but offering less long-term control. • Accumulation Trust: Allows the trustee to retain withdrawals in the trust, protecting assets even after they are distributed from the retirement account. BUILD A TRUST STRATEGY THAT PROTECTS YOUR LEGACY A trust isn’t always necessary, but it can protect and structure retirement accounts. Dahl Law Group helps California families determine whether it aligns with their estate and tax plans. Ready to protect your hard-earned retirement savings? We’ll help you create a strategy that secures your family’s future and ensures compliance with evolving tax laws.
them solve their tax, business, or estate planning problems before things get worse.
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