MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

The Retirement Account Trust Loophole 🏦

12 Jun 2026 · 2 min

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1:46

In this segment, Mark Kohler explains the concept of “see‑through trust provisions,” a clause inserted into trusts that allows a retirement account named to the trust to be treated as if the individual beneficiary were the direct owner for required minimum distribution (RMD) and election purposes. He emphasizes why this matters, using a 401(k) example: a $200,000 account where the primary beneficiary is the spouse and children are contingent beneficiaries. Kohler warns that failing to update beneficiary designations after life changes—such as having additional children, divorce, or a child’s personal issues—can lead to unintended distributions. Direct payouts to children may land in the hands of minors, individuals in rehab, or those undergoing divorce, creating financial and legal complications. The overall message is a cautionary call to review and properly structure retirement account beneficiary designations, leveraging see‑through trusts to avoid these pitfalls.

Chapters

Every trust we design, we put in what's called see-through trust provisions, a special section that says if the trust is a beneficiary of a retirement account, you see through the trust as to who the beneficiary as an individual is of this particular account and make any elections that they're allowed to make if the trust wasn't here. That can be a really big deal. Here's why. Let's say you have a 401 at work. $200,000 401, and you go to the lunchroom for the annual company meeting where they talk about health insurance and how you want to invest your 401. And then that fateful moment with the HR director, they'll say, hey, does anybody have to make a beneficiary change? Come up here and you can fill out a COB, a change of beneficiary form. Now you want to pay attention to this because let's say when you formed that 401, you made your spouse, if you were married, the primary beneficiary, and it was just easy to say, oh, my kids in equal shares will be the contingent beneficiaries. And so if you die, the 401 would go to your spouse and then in equal shares to your kids. Oh, that sounds so easy. But what if you've had some children since you filled out that original 401 paperwork? Let's say you're divorced and didn't get in and update that 401. And then your kids, let's say one of them, heaven forbid, fell off the wagon. Is in rehab or really going through a difficult time. Another one could be in the middle of a divorce. Another one could be under age 18. And you want that $200 grand to get dropped into their laps? I think I probably gave some of you a chill up your spine, right? There could be a lot of weird things that could happen by just allowing the 401 to get distributed to the children or whoever.