Beneficiaries on IRAs

Beneficiaries on IRA’s


I read an article covering basic mistakes that agents make that can be very costly errors within the realm of IRA’s. Here are some things that can happen when you don’t spend enough time stressing the importance of good beneficiary planning.

  1. Intended beneficiaries may and in most cases get disinherited or the estate will name alternative beneficiaries than what was intended.
  2. Expensive lawsuits and litigation when more than one beneficiary involved, but there is no designation as to who gets what.
  3. No stretch Ira for the beneficiaries, meaning less favorable after death rules on distribution will apply depending on when the IRA owner died.
  4. 5 year rule will apply to inherited Roth IRAs. Since the Roth IRA has no lifetime RMD (required minimum distribution), a Roth IRA owner is always deemed to have died before his required beginning date because there is no required beginning date.
  5. No post-death rollovers from company plans to non-spouse beneficiaries. That only applies when there is a designated beneficiary.
  6. Voids IRA trust planning. The trust will fail as a see-through trust.
  7. Post death disclaimers may not work out according to plan
  8. Can negate divorce agreements. The ex-spouse may end up being the beneficiary.
  9. Can be subject to probate and contests. This will result in an unintended beneficiary.
  10. Can trigger default provisions that man direct eh IRA to an unintended beneficiary.


For more information, please contact me at 402.334.6326.

David Corwin, Annuity Sales Manager

Posted in Annuities.