A more thorough explanation:

An accumulation trust is a type of trust that allows withdrawals to be made or kept within the trust. It is often used by people with individual retirement accounts (IRA) to transfer their assets into a trust in case they die before withdrawing all of the assets. This allows the trustor to specify how the beneficiaries receive the money while still keeping the tax-deferral benefits of the IRA.

To establish an accumulation trust, the person must meet all the requirements for a legal trust, name specific beneficiaries, make the trust irrevocable when they die, and provide the documentation to the custodian of the IRA. The trust is subject to required minimum distributions (RMD) as given in the SECURE Act of 2020.

For example, John has an IRA worth $500,000. He establishes an accumulation trust and names his two children as beneficiaries. When John dies, the assets in his IRA are transferred into the trust. The trust specifies that the children will receive equal distributions from the trust every year until the assets are depleted. The RMDs from the trust can be reinvested in the trust, but the profits they produce will be taxed.

Beneficiaries of an inherited IRA trust must distribute all of the assets within 10 years, and they must distribute at least a tenth of their share each year. There are a couple of exceptions for spouses, disabled individuals, minors, and other individuals that may be able to extend the distribution period for much longer. The reason for the 10-year distribution period imposed by the SECURE Act is to prevent beneficiaries from abusing the tax-deferral of the IRA.

For example, Sarah inherits an IRA from her father. She establishes an accumulation trust and names her children as beneficiaries. The trust specifies that the children will receive equal distributions from the trust every year until the assets are depleted. Since Sarah's children are minors, they are eligible for an extended distribution period.

Accumulation trusts are different from conduit see-through trusts that require the beneficiaries to be paid their distributions. In accumulation trusts, the RMDs can be reinvested in the trust, but the profits they produce will be taxed.