Trusteed IRA Does not have to be a Conduit Trust

I have a client is thinking about opening a trusteed IRA (an IRA that is already a trust and not a custodial IRA) with a bank. The bank officer is telling me that since the IRA is already a trust that my client and his beneficiaries do not need to worry about the trust qualifying as a conduit trust.
Do you think it is correct that a trusteed IRA does not have to worry about being a conduit trust?
I read Natalie Choate’s book and her book said the trust officer is correct.



  • Trusteed IRAs don’t have to be conduit trusts, but unfortunately the ones I’ve seen have been.
  • For more details on why not to set up a trusteed IRA, see my article on that subject in the September 2009 issue of Trusts & Estates:  http://kkwc.com/wp-content/uploads/2015/04/uf_trusteed_IRA.pdf.
  • He/she could simply put the trust(s) that will receive the IRA benefits in his/her Will.


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