How to Set Up and Properly Fund a Retirement Account Trust

Coordinating retirement accounts, e.g., an Individual Retirement Account, a 401(k), Self-employed Pension, etc., with your overall estate plan is difficult. Retirement accounts, also known as “qualified accounts”, must be handled with care. Generally, if the account owner designates his or her estate as the primary beneficiary, the non-natural person rule is triggered, and the entire account balance is treated as paid out as income. This causes the distribution of the entire account as income and is taxed at a higher or the highest tax rate possible. Other complications include the fact that retirement accounts are included in the taxable estate when the decedent lives in a state with a separate estate tax. Worst, retirement accounts do not enjoy an adjusted tax basis.

In this episode, we lay out these rules and answer questions about retirement account trusts, and they can coordinate with the Spousal Protection Trust. Darol also discusses resources that are available to all Family Leaders at the BoomX Academy. Although this episode includes technical information, it is part of many episodes that put it all together.