IRS Beneficiary Form
I just caught the tail end of Ed’s PBS show, and heard it mentioned the one thing everyone must do was file an IRS beneficiary form to protect assets for beneficiaries. Did anyone catch this show and tell me the name of the form and what is the benefit of completing it? Also, since I do not have a spouse or children, does this form protect non-family members? Many thanks.
Permalink Submitted by Alan Spross on Thu, 2008-09-11 20:10
Each IRA custodian (not the IRS) has their own proprietary beneficiary designation form to complete. All you have to do is ask for a copy or in many cases you can download them from the firm’s website.
The form reflects your desire as to where and in some cases how the funds will pass at your death. You can name anyone you want as your beneficiary including a charity. After filing the form, you should periodically check to make sure the custodian’s records still reflect your wishes. You can change your beneficiary any time you wish. Some firms will accept customized designations and some will not.
If you do not complete a beneficiary form, your IRA will go to the default beneficiary per the terms of the IRA agreement. With no spouse or children, that default beneficiary would likely be your estate and if you have a will, it would be subject to probate to determine the recipient of the IRA account. If you have no will either, then the state intestate provisions would come into play to determine where the funds went. It is not a good idea to let the IRA go through your estate even if you have a current will, because the beneficiary will not be able to stretch the RMDs over their own life expectancy, and more will be lost to taxes.