Contingent Beneficiaries

Submitted by James Kirchner on Wed, 2015-10-07 14:01

Is it appropriate to say “as per will” when naming a contingent beneficiary for an IRA? What are the pitfalls when using such an approach?

Permalink Submitted by Alan - IRA critic on Wed, 2015-10-07 15:48

It would be listed as “estate of xxxx”, which automatically assigns priority to the will but if no will then state intestate provisions would apply. In many IRA agreements the estate is the default beneficiary anyway, especially when there is no surviving spouse.
If the estate inherits due to disclaimer or pre deceased primary beneficiary, the 5 year rule will apply to RMDs if IRA owner passed prior to the RBD, and the remaining life expectancy of the decedent if owner passed after the RBD. And estate beneficiaries would not have full control of the inherited IRA until the executor assigned the IRA to beneficiaries when the estate terminates or perhaps somewhat earlier.

Permalink Submitted by Bruce Steiner on Fri, 2015-10-09 01:59

It’s not appropriate. It’s not clear what it means. If it means that the IRA would be payable to the IRA owner’s estate, that would destroy the stretch and expose the IRA benefits to the IRA owner’s creditors.