Qualified Trust

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DEFINITION of 'Qualified Trust'

A tax-advantaged fiduciary relationship between an employer and an employee in the form of a stock bonus, pension, or profit-sharing plan in which the underlying beneficiary may use his or her life expectancy to determine required minimum distribution amounts. Section 401(a) of the Internal Revenue Code authorizes and sets forth the requirements for a qualified trust.

INVESTOPEDIA EXPLAINS 'Qualified Trust'

To be qualified, a trust must be valid under state law, must be irrevocable (or become irrevocable when the retirement account holder dies) and must have identifiable beneficiaries. Furthermore, the IRA trustee, custodian or plan administrator must be provided with a copy of the trust instrument. If a qualified trust is not structured correctly, disbursements will be taxable.

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  1. What are the requirements that a trust needs to meet to be qualified?

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    Related information can be found in IRS publication 590. See page 32 (bottom right hand corner) and page 35. If the trust ... Read Full Answer >>
  3. What are the restrictions for naming a given individual as my contingent beneficiary?

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  5. How do you mediate a dispute between primary and contingent beneficiaries of a trust?

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