Qualified Trust

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Definition - What does Qualified Trust mean?

A qualified trust is a retirement plan for an employee. It is arranged by their employer and is tax-deferred.

This form of individual retirement account may pay as a pension, stock shares, or profit shared, with an expected annual minimum withdrawal. Beneficiaries of the trust must also be named for it to be considered valid.

Insuranceopedia explains Qualified Trust

Withdrawals from a qualified trust begin after retirement. The minimum withdrawal is based on the average life expectancy. The beneficiary may not benefit from the tax advantages if they withdraw part or all of the funds before they retire or reach the designated retirement age.

A qualified trust is an irrevocable trust. This irrevocable status extends even after the death of the owner. The administration of the trust and its assets with regards to its beneficiaries is, therefore, crucial.


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