IRA / Retirement plan question…
If participant names sister as beneficiary in a community property state and then gets married, does sister or husband get IRA or retirement plan balance upon participant’s death? I know that Ed talks about the New York example where husband does NOT get money but rather spouse’s sister due to bene change form NOT being submitted, but that is not a community property state. Any tax reference to site for ruling on this would help.
Permalink Submitted by Denise Appleby on Sat, 2007-10-06 10:58
Cite is State law.
What the spouse would be entitled to, would be determined by the State’s definition of community property. Generally, community property is defined as what is accrued during the marriage- with the spouse being entitled to 50%. If such is the case, then the spouse would be entitled to 50% of the IRA balance accrued during the marriage.
Best bet is to consult with a local estate planning attorney…and keep the IRA balance accrued before the marriage in a separate IRA. Of course if the participant can get the spouse to consent- in writing- to the sister being the designated beneficiary- that may be the simplest route to take.