Does per stirpes of a primary beneficiary override the contingent beneficiary?
Does a per stirpes election for a primary beneficiary of an IRA override the contingent beneficiaries?
For example, say an IRA owner names their spouse per stirpes as the primary beneficiary and their brother as the contingent. If the spouse predeceases the IRA owner and then the owner passes away, the IRA would go to the descendants of the spouse and not the contingent beneficiary brother, is that correct?
As a follow up question, if the kids do in fact inherit the IRA in this scenario, can per stirpes beneficiaries keep the IRA as an inherited IRA or is it distributed to them outright outside the IRA in a taxable distribution?
Permalink Submitted by Alan - IRA critic on Wed, 2021-12-22 02:01
Correct. Naming a contingent beneficiary with a per stirpes is largely redundant, except when the per stirpes line runs out of lineal descendents.
Follow up question – the per stirpes descendents can establish their own individual inherited IRAs and distribute as designated beneficiary RMDs or additional distributions.