A Self Directed IRA is considered an Irrevocable Trust

[Chris Seveney]

I learn something new every day. I was completing some paperwork on a syndication and the options available were LLC, Individual, Corporation, Irrevocable trust and revocable trust.

I asked the custodian what is the IRA considered and they mentioned IRS (I believe rule 401(a)) considers a solo 401k and IRA an irrevocable trust.

Just thought I would share this as I was really curious.

[Brian Eastman]

@Chris Seveney

I suspect the person you spoke with either mis-spoke or perhaps you mis-heard.

Neither an IRA or a Solo 401(k) would be considered an irrevocable trust. The employer and/or plan participant has the authority to alter or terminate (revoke) the trust in both cases, such as by closing the plan (subject to terms of distribution or rollover) or changing beneficiaries. In order for a trust to be irrevocable, it may not be altered after inception other than by the death of the grantor.

There are certain estate planning tactics where an irrevocable trust might be named as a beneficiary of an IRA or 401(k).