Yes, you can leave your 401(k) or IRA to a trust in Florida by naming the trust as the beneficiary on the account. It often makes sense when your beneficiaries are minors, have special needs, struggle with money, or are in a second marriage situation where you want control over who ultimately receives the account. But retirement accounts follow special tax rules, and a trust that isn’t drafted for them can cost your family thousands in extra income tax.
For many people, naming individuals directly is simpler and works well. This guide explains when a trust is worth it, how the inherited account rules work, and what the trust needs to say.
Why retirement accounts are different
Your 401(k) and IRA don’t pass under your will or your trust’s general terms. They go to whoever is named on the account’s beneficiary designation form. If you want a trust to receive them, the trust has to be named on that form, and the trust has to be written with retirement account rules in mind. (Why naming a beneficiary is one of the most important steps in estate planning)
How Inherited Retirement Accounts Work Today
The SECURE Act, which took effect in 2020, changed the rules for inherited retirement accounts. The old “stretch,” which let children and grandchildren take small withdrawals over their whole lives, is gone for most beneficiaries.
The 10-year rule
Most people who inherit a 401(k) or IRA must empty the account by the end of the 10th year after the owner’s death. Under IRS regulations that apply starting in 2025, if the owner had already started taking required minimum distributions, the beneficiary must also take annual withdrawals during those 10 years, not just empty the account at the end.
Who can still stretch withdrawals
A small group, called eligible designated beneficiaries, can still take withdrawals over their life expectancy:
- A surviving spouse
- The owner’s minor child (until age 21; then the 10-year rule starts)
- A beneficiary who is disabled or chronically ill
- A beneficiary who is no more than 10 years younger than the owner
Why this matters for trusts
These rules decide how fast money comes out of the account, and every withdrawal from a traditional 401(k) or IRA is taxable income. When a trust is the beneficiary, the trust’s terms affect both how fast withdrawals happen and who pays the tax on them.
When Naming a Trust Makes Sense
A trust adds cost and complexity, so it should solve a real problem. Common reasons to name a trust as the beneficiary of a 401(k) or IRA:
- Minor children or grandchildren. A minor can’t manage an inherited account. Without a trust or a custodian, the family may need a court-supervised guardianship. (Florida UTMA accounts)
- Young adults or spenders. The 10-year rule means a 22-year-old could have full access to a large account. A trust can control how quickly the money reaches them.
- A beneficiary with special needs. A properly drafted supplemental needs trust can protect eligibility for SSI and Medicaid.
- Second marriages and blended families. A trust can provide for a surviving spouse during their lifetime and make sure what’s left goes to your children. (What is the best trust for blended families?)
- Creditor and divorce protection. Money held in a well-drafted trust can be better protected from a beneficiary’s creditors or a divorcing spouse.
The Downsides of Naming a Trust
- Higher income taxes if money stays in the trust. Trusts reach the top 37% federal income tax rate at just over $16,000 of retained income in 2026, compared with hundreds of thousands of dollars for individuals. Withdrawals the trust keeps, instead of passing out to beneficiaries, can be taxed heavily.
- A surviving spouse loses options. A spouse named directly can roll the account into their own IRA. When a trust is the beneficiary, that option generally isn’t available.
- Drafting mistakes are expensive. A trust that doesn’t meet IRS requirements may be forced onto a faster payout schedule, accelerating the tax.
- More paperwork. The trustee must track withdrawals, file trust tax returns, and give the account custodian the information it needs.
What the Trust Needs to Say
It must qualify as a “see-through” trust
For the IRS to look through the trust to the people who benefit from it, the trust generally must:
- Be valid under state law
- Be irrevocable, or become irrevocable at your death (a revocable living trust does)
- Have beneficiaries who can be identified
- Provide required documentation to the plan administrator or account custodian, generally by October 31 of the year after your death
A trust that doesn’t qualify can be forced to empty the account faster, which speeds up the tax.
Conduit trust vs. accumulation trust
Retirement account trusts usually take one of two forms:
| Conduit trust | Accumulation trust | |
|---|---|---|
| What happens to withdrawals | Passed straight through to the beneficiary | Can be kept in the trust |
| Who pays the income tax | The beneficiary, at their own rate | The trust, at trust rates, for amounts it keeps |
| Protection and control | Less, since the money reaches the beneficiary as it comes out | More, since the trustee decides when to distribute |
| Often used for | Responsible adult beneficiaries, a surviving spouse | Minors, spenders, special-needs beneficiaries, creditor concerns |
Under the 10-year rule, a conduit trust may end up passing the whole account to the beneficiary within 10 years anyway. An accumulation trust gives more control but at a higher tax cost. Choosing between them depends on your beneficiaries and your goals.
Coordinate it with your beneficiary designation
A trust only works if the beneficiary form actually names it, using the trust’s exact name and date. Review the form whenever you update the trust, and name a contingent beneficiary too.
Florida-Specific Points
Inherited IRAs and creditors
Florida law protects retirement accounts from creditors, and that protection continues after the owner’s death when the account is transferred to an inherited IRA (Fla. Stat. 222.21). That helps beneficiaries who live in Florida. A beneficiary who lives in another state may not get the same protection, which is one more reason some families use a trust.
401(k) plans and your spouse
Most 401(k) and other employer plans are governed by federal law. If you’re married, your spouse generally must consent in writing before you can name anyone else, including a trust, as the primary beneficiary. IRAs generally don’t have that requirement. Check with your plan before you change the form.
Divorce and old designations
Florida law generally treats a beneficiary designation to a former spouse as void after a divorce, but federal law can override that for 401(k)s and other employer plans. The safest step is to update every beneficiary form after a divorce.
How This Plays Out in Practice
These are composite examples, not actual client matters.
The 19-year-old heir. A widower in Miramar named his 19-year-old son directly on a $600,000 IRA. When he died, his son had to empty the account within 10 years and could withdraw all of it at once. An accumulation trust with a trusted family member as trustee could have let the money come out more gradually and stay protected.
The second marriage. A woman in Coconut Creek wanted her husband to have income from her IRA for life, with whatever remained going to her two children from her first marriage. Naming her husband directly would have let him roll it over and name his own beneficiaries. A trust designed for retirement accounts let her provide for him while protecting her children’s share.
The trust that didn’t need to be named. A couple in Plantation planned to name their revocable trust as beneficiary of their IRAs “to keep everything in one place.” Their children were financially responsible adults. Their attorney recommended naming each other first and the children directly as contingent beneficiaries, keeping the spousal rollover and avoiding trust tax rates.
When to Speak with an Estate Planning Attorney
Talk with an estate planning attorney before naming a trust as the beneficiary of a retirement account if:
- Your beneficiaries include minors, young adults, or someone who struggles with money
- A beneficiary has special needs or receives government benefits
- You’re in a second marriage and want to protect your children’s inheritance
- Your retirement accounts make up a large part of your estate
- Your current trust was written before the SECURE Act changed the rules in 2020
- You’re married, the account is a 401(k), and you’d need your spouse’s consent
The right answer often involves your financial advisor and CPA as well, since withdrawals and taxes have to be planned together.
SJF Law Group helps families in Broward, Miami-Dade, and Palm Beach Counties coordinate retirement accounts with their trusts and estate plans. Meetings are available in person at our Plantation office or remotely. Call (954) 580-3690 or contact us online to schedule a complimentary consultation. Current clients can schedule a complimentary annual plan review.
Frequently Asked Questions
Can I name my revocable living trust as the beneficiary of my IRA?
Yes. A revocable trust becomes irrevocable at your death, which is one of the requirements. But the trust also needs language written for retirement accounts. A general-purpose living trust may not have it.
Does my will control my 401(k) or IRA?
No. These accounts pass to whoever is named on the beneficiary designation form, regardless of what your will says.
What happens if I don’t name any beneficiary?
The account usually goes to your estate under the plan’s default rules. That can mean probate and a faster payout schedule for your heirs.
Should I name my spouse or a trust?
For many married couples, naming the spouse directly is simpler and preserves the option to roll the account over. A trust may be better in second marriages or when the spouse needs help managing money.
Is a Roth IRA treated differently?
Roth IRAs follow the same 10-year rule for most beneficiaries, but qualified withdrawals are generally tax-free. That makes the trust tax-rate concern much smaller for Roth accounts.
Do I need my spouse’s permission to name a trust?
For most 401(k)s and other employer plans, yes, your spouse must generally consent in writing. For IRAs, spousal consent generally isn’t required.
About This Article
Written by Samantha Fitzgerald, Esq., founder and managing attorney of SJF Law Group. Samantha is a Florida-licensed estate planning and probate attorney, a licensed CPA, and holds an LL.M. in Taxation.
Learn more: Wills, Trusts & Estate Planning
Related reading: Why naming a beneficiary is one of the most important steps in estate planning
Watch: https://youtu.be/sPa8lhYCkgQ?si=-LTelhVxbBU7UpqV&t=2118
This article is for general information only and is not legal or tax advice. Reading it does not create an attorney-client relationship. Every situation is different, so speak with an attorney and your tax advisor about your specific circumstances.
