IRC § 401(a) begins by describing a trust "created or organized in the United States and forming part of a stock bonus, pension, or profit-sharing plan...".

The trust laws of most states include a concept called the doctrine of merger. If the only beneficiary is also the only trustee, then the two titles, beneficial and legal respectively, merge and that person holds title in fee. That is, the person owns the assets outright, free of trust. There is no trust under such circumstances.

Given the number of one-person plans that have sprung up, and many if not most listing just that one person as the trustee, it occurs that the doctrine of merger might be problematic.

Has anyone looked into this and found any ruling or logically arrived at a reason that the trust law doctrine of merger would not apply to one-person QRPs?

The question is who whould ever challenge the the existance of the trust and why? The IRS? Keogh plans have been around since 1962 and most of them have a custodian who holds the assets. The IRS ignores certain common law trust rules such as the requirement that the trust have assets as of the end of the year in which the plan waa adopted in order to be deemed in existance for tax deductions.

Why wouldnt you have the same problem with IRAs?

You should also check stgate law. Some states may no longer enforce the merger doctrine.

The IRS has been, Matt, express on the point about not needing to meet the state trust law requirement that a trust must have assets (a corpus) as of the end of the year the plan was adopted for it to have an existence for tax deduction purposes. Do you know has it been express that the trust doctrine of merger may be ignored as well?

It is somewhat of an issue based on an IRS ruling from the 70s or 60s, albeit a hyper-technical one. Easy cure is to make the spouse a co-trustee, or the individual who would become the executor upon the death of the participant. This is also a good idea from a practicality standpoint so that someone can step in immediately if the participant dies. The other answer, to which mbozek alluded, is that a plan that is not subject to Title I of ERISA does not need to have a trust; it can be funded through a custodial account held by a bank, trust company or other person that has been approved as a non-bank custodian (but that won't solve the "what happens if the participant dies" problem).

Perhaps state law merger won't apply if the participant's beneficiary is other than the participant's estate. For example, I believe that state law merger does not apply to a revocable trust if the remainder beneficiary is other than the beneficiary-grantor's estate.