Primary and contingent bene added on an inherited IRA
Can a contingent bene be added to a non-spousal inherited IRA? I have a prospect and he received an ira from her mom. She was told she can add her husband as the primary but she could not add contingent benes. Is this correct?
Permalink Submitted by Alan - IRA critic on Thu, 2017-04-06 23:12
Not sure if the beneficiary options are affected by anyone other than the IRA custodian’s operating procedures. Generally, a beneficiary can only name their own successor beneficiary (her husband), and if he inherits the IRA from her, he could then typically name his successor beneficiary. A beneficiary cannot normally name a contingent beneficiary, which is different than a successor beneficiary.
Permalink Submitted by William Tuttle on Fri, 2017-04-07 00:30
Alan, unless I am misunderstanding what you are saying. I have seen multiple custodians refer to the beneficiaries of a non-spouse inherited IRA as Primary and Contingent (or Secondary) and in one case even Tertiary. These are treated the same as any other beneficiary. A contingent beneficiary would receive the account if the primary beneficiary predeceased the original non-spouse beneficiary.
Permalink Submitted by Alan - IRA critic on Fri, 2017-04-07 01:56
Some custodians may offer this and some do not. Apparently, more offer this than I thought. If the beneficiary considers this option important they can always transfer the inherited IRA to a custodian who will allow them to set up their beneficiaries in this manner.