Mesa AZ | Who Gets My IRA Benefits

Who Gets My IRA Benefits If I Have Not Designated A Beneficiary?

When you set up an Individual Retirement Account (IRA) or other retirement account, you will have the opportunity to designate beneficiaries. These are the individuals eligible to receive the funds in your account after you pass away. The majority of married people name their spouses as beneficiaries.  It is also wise to name contingent beneficiaries:  those who will receive your benefits if your primary beneficiary predeceases you. Here are some other tips that will answer the question, “Who gets my IRA Benefits?”

What If I Forget to Name a Beneficiary?

If you pass away with no beneficiary designation for your IRA or other retirement account, benefits will generally be payable to your estate. There are two reasons that you want to avoid this. First, the assets in your IRA would have to go through probate before they could pass to your heirs. Second, when your IRA passes through your estate rather than directly to a designated beneficiary, federal law provides that the account balance must be fully distributed within five years. This denies your heirs the benefit of income deferral.  By deferring income, the tax burden can be spread out over a longer period of time and the deferral almost always yields a greater return for your heirs.  An estate planning attorney can help guide you in making beneficiary designations.

Updating Beneficiary Designations

While naming beneficiaries is important, it’s also important to review these designations after major life events. Examples include the death or birth of a loved one or marriage, or divorce. Those who change jobs should also take note that beneficiary designations linked to retirement plans at work (such as 401(k) plans) do not automatically roll over upon starting a new position.

Besides My Retirement Plans and IRA, Where Else Do I Need to Designate Beneficiaries?

There are several different accounts that invite regular review in addition to your retirement plans. These include:

  • US. savings bonds
  • Life insurance policies
  • Annuities

Your Arizona estate planning attorney can help you identify the designations that need to be reviewed on a regular basis.

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Who Gets My IRA Benefits, or any other estate planning matters, please feel free to contact Stephen L. West at 480.461.5341,or Curtis M. Chipman at 480.461.5329. You can also log on to udallshumway.com,  or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.