What Is a See-Through Trust? Definition and Requirements

A see-through trust is a legal arrangement that enables a person to pass retirement assets from an individual retirement account (IRA) to beneficiaries after their death. For required minimum distribution (RMD) purposes, the trust itself is not treated as the designated beneficiary. However, if specific requirements are met, the trust’s beneficiaries can be treated as designated beneficiaries. This can affect how quickly the inherited retirement account must be distributed.

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Two Types of See-Through Trusts: Conduit Trusts vs. Accumulation Trusts

There are generally two types of see-through trusts: conduit and accumulation trusts. Both types ultimately achieve the same goal of holding an interest in retirement assets for beneficiaries. However, they differ when it comes to distribution and taxation.

With a conduit trust, as distributions from a grantor’s retirement account are made to the trust, the trustee passes those distributions to the beneficiary under the terms of the trust. An accumulation trust, on the other hand, gives the trustee the authority to pay out or retain distributions within the trust, where the money can remain subject to the trust’s distribution provisions.

Taxes on distributions from conduit and accumulation trusts can also vary. A conduit beneficiary will generally report taxable retirement distributions passed through to them. Meanwhile, an accumulation trust can owe income tax on taxable distributions it retains. Trust tax brackets are compressed compared with individual brackets. For 2026, the 37% federal income tax rate for estates and trusts begins when taxable income exceeds $16,000.

How and When Money Is Distributed From See-Through Trusts

See-through trusts and estate planning changed significantly after the SECURE Act became law in 2019. The law eliminated the ability of many non-spouse designated beneficiaries to stretch IRA distributions over their life expectancies.

For most designated beneficiaries who are not eligible designated beneficiaries, they must empty the inherited account by December 31 of the year containing the 10th anniversary of the account owner’s death. If the owner died before the required beginning date, they generally do no have to take distributions during years one through nine under the 10-year rule. If the owner died on or after the required beginning date, a designated beneficiary subject to the 10-year rule generally must take annual RMDs during that period and empty the account by the end of year 10.

Some beneficiaries can qualify for different rules. Eligible designated beneficiaries include a surviving spouse, the account owner’s minor child, a disabled or chronically ill individual and an individual who is not more than 10 years younger than the account owner. Depending on the circumstances, these beneficiaries can qualify to take distributions based on life expectancy rather than being immediately subject to the standard 10-year rule.

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How Beneficiaries Can Change Distribution Rules

An advisor and client discussing what a see-through trust is.

Naming a trust does not automatically allow for the distribution of retirement assets over a beneficiary’s life expectancy. Instead, rules vary depending on the specific person and their status, which determines which RMD rules apply.

For example, if the relevant trust beneficiary is an adult child who does not meet one of the eligible designated beneficiary exceptions, the inherited account will generally be subject to the 10-year rule. By contrast, certain trusts benefiting a surviving spouse or a beneficiary who is disabled or chronically ill can qualify for different distribution treatment. They must meet certain requirements, though.

There are also special rules for certain applicable multi-beneficiary trusts. These trusts must have more than one beneficiary, all of whom are designated beneficiaries. At least one beneficiary must be disabled or chronically ill. Depending on the structure of the trust, the retirement account rules can allow separate treatment for beneficiaries or preserve life-expectancy distributions for a qualifying disabled or chronically ill beneficiary.

Because the trust’s beneficiaries and distribution provisions can change the tax treatment of an inherited IRA, it’s vital to review the trust document and retirement account beneficiary designation together rather than independently.

Other Requirements for See-Through Trusts

See-through trusts must meet several requirements for the underlying trust beneficiaries to be treated as designated beneficiaries for RMD purposes:

The trust must be valid under state law. Or, it would be valid except for having no trust property.
The trust must be irrevocable or become irrevocable by its terms upon the retirement account owner’s death.
The beneficiaries, with respect to the trust’s interest in the retirement account, must be identifiable from the trust document.
The trustee must provide the retirement account custodian or trustee with the required trust documentation.

Additionally, it’s necessary to identify the beneficiaries by Sept. 30 of the calendar year following the account owner’s death. Documentation requirements also have specific deadlines. These can vary depending on the type of documentation provided. As such, the trustee should confirm the requirements with the retirement account custodian after the owner’s death.

Bottom Line

Setting up a see-through trust can be a valuable component of estate planning. They make it possible for a trust to receive retirement assets while allowing its beneficiaries to be considered for the RMD rules that apply to designated beneficiaries. Conduit and accumulation trusts differ in the handling of retirement distributions after they leave the account. Additionally, the SECURE Act rules has implications for the distribution timeline of the underlying retirement account assets.

Tips for Estate Planning

Working with a financial advisor can also help you create a financial plan to reach your estate planning and other goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area. Then, you can have a free introductory call with your advisor matches to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Concerned about leaving loved ones with the burden of paying taxes on your retirement assets? You might consider converting your traditional IRA account to a Roth account and assuming the tax bill yourself.