Beneficiary Designation Rules for IRAs?
Are there rules/regulations governing how IRA beneficiary designations can be structured? Is it permissible to designate that in the event one of multiple primary beneficiaries predeceases IRA Owner, such primary beneficiary’s share goes to a specific contingent beneficiary (but not a descendant)?
Example –
IRA owner wants to designate Son 1 (50%) and Son 2 (50%) as primary beneficiaries. He further wants to designate that in the event Son 1 predeceases IRA Owner, and Son 2 is still living, that Son 1’s share will go to Son 1’s Spouse. Per Stirpes and Per Capita designations do not accomplish this.
If the financial institution is willing to administer the designation described above, is there anything (rule, regulations) that prevents it? I have researched and cannot find anything that addresses this situation.
Thank you in advance.
Permalink Submitted by Alan - IRA critic on Tue, 2018-02-20 21:07
There is no restriction to doing this other than the IRA Custodian’s beneficiary clause or willingness to accept a customized designation. Of course, unintended consequences of a customized designation would be reduced in a case like this by maintaining 2 separate IRA accounts, with one of them naming Son 1 as primary with his spouse as contingent and perhaps Son 2 as tertiary. Other IRA Son 2 as primary and Son 1 as contingent.