Can I Put My RMD Into A Trust?

Can I Put My RMD Into A Trust? In this episode of Berry’s Bites, Chris Berry answers the question: Can I put my Required Minimum Distributions into a Trust?



Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.

Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.

Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.

With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.

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Episode Transcript:


Can I put an RMD into a trust?

The answer to that is yes. These happen in pre-tax accounts like traditional 401ks. The big one is IRAs. And so what happens at age 72 Now with secure Act 2.0 that’s pushed back to 73, potentially 75, depending on your age. What’s going to happen on these pre-tax accounts is that you have to take money out and pay tax.

You pay the tax on the I., and you can put it in a trust. And then also the question was, can I do a Roth conversion or Roth? So both of these, whether we’re talking about trust or we’re talking about putting the money into the Roth, we call both of these. An IRA exit strategy. So you’re taking money out of the ira, paying a tax, and looking at what you can do with it.

With this forced required minimum distribution, you can put it into the trust, but you cannot put it into a Roth. You cannot put an RMD required. Minimum distribution from an IRA can go into a trust. It cannot go into a raw, what you would have to do. You would have to do what’s called Roth conversions, and with the Roth conversion, what you would do is take money from the IRA and you would move the money directly into the Roth.

The only downside is you have to pay the tax, but before you can do a Roth conversion, you have to first take out your required minimum distributions. So if you have, say, a $20,000 required minimum distribution, you have to take that money out of the IRAand pay the tax. and it can go into a trust. It goes into your checking account.

You can spend the money, but it cannot go into a raw. And then once you’ve done that R M D, then you could look at Roth conversions based on your tax brackets. So the answer to the question, can I put an RMD into a trust? The answer to that is, yes, but can I put my RMD into a Roth? The answer to that is no.

We’d have to do a Roth conversion. That would have to be a separate transaction. That’s another reason why a lot of times we’re looking at paying the money on the IRA sooner rather than later so we can do things. So we’re not forced to take out these required minimum distributions, where now the money has to go into a post-tax account, like a trust. It can’t go into an RMD.

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