Why would an IRA account owner want to name a trust or non-person as their beneficiary? One type of frequently used trust is call a “see-through” trust. It creates a mechanism for the deceased to control account withdrawals, post-death. In addition a see-through trust allows the underlying beneficiary to stretch distributions over their life expectancy. Prior to naming a trust as a beneficiary an investor needs to be aware of the complex rules that govern trusts. You also must name your trust as a beneficiary on the IRA beneficiary designation form or other form acceptable to the IRA custodian.

First you would need to confirm that the trust meets IRA requirements as a “look-through” or  “see-through” trust. It’s referred to as a look-through trust because one is able to look through the trust to the named beneficiaries. In order for the trust to allow for life expectancy distributions (“stretch”) all trust beneficiary must be individuals. Unless separate trusts are established for each beneficiary, i.e. the shortest life expectancy among the named beneficiaries will be used to determine the life expectancy factor that determines the amount of the required withdrawal which is then divided among the beneficiaries according to percentages designated by the trust.