Designating Beneficiary

[Guest AdminFL]

Is it OK for a participant to set up an Irrevocable Trust as beneficiary of his 401(k) Plan?

[Guest RNorris]

The trust itself will not be considered the designated beneficiary, but the beneficiaries of the trust will be treated as designated beneficiaries if the trust meets 4 requirements.

Being an irrovocable trust is one of the requirements. The others are that the trust is valid under state law, the beneficiaries of the trust are identifiable under the trust doc., and that the plan receives a copy of the doc. or a certified list of beneficiaries.

The last referrence I could find was Prop. Tres. Reg. Sec. 1.401(a)(9)-1, Q&A's. Not sure if this is still proposed or finalized.

[jpod]

The answer to the question is "yes;" an irrevocable trust certainly can be designated as a beneficiary. RNorris' very correct response addresses the 401(a)(9) minimum distribution implications of naming a trust as beneficiary. Nonetheless, the trust IS the beneficiary, in the sense that the trust gets the $$ left over at the death of the participant, regardless of who the beneficiaries are or their number.

[Guest AdminFL]

Thank you both for your responses. You have been very helpful.