Conduit trust
Certified Financial Planner glossary · Certified Financial Planner
Definition
A trust named as retirement account beneficiary that immediately passes each distribution to the beneficiary, preserving see-through status.
Conduit trust in plain English
IRA trust language requires every plan distribution to be paid out to the individual beneficiary in the same year. That conduit trust keeps see-through status by never letting retirement distributions pile up inside the trust. An accumulation trust may retain those dollars and pay tax at compressed trust brackets. SECURE Act payout calendars still matter, but choosing conduit versus accumulation drafting is a recurring beneficiary-designation trap on CFP items.
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