Wedded Miss: How Changing Your Last Name Affects Moving Your Retirement Money

Tradition has it that when a man and a woman get married, the woman typically takes the last name of her husband. Although today, many choose to modify this tradition, perhaps by hyphenating their maiden name with their husband’s surname, or do away with it altogether and keep their own name, there are still many who keep this tradition alive.

One potential consequence of changing your name is that moving your retirement money around might become a little more challenging. This has nothing to do with any tax code rules or other laws, but is simply a result of the policies many custodians have in place. When money is transferred from one IRA directly to another IRA in a trustee-to-trustee transfer, many custodians want to have everything “match-up” before they will accept the funds. That means that if you have your maiden name on an old IRA or plan account and your married name on the new one, the transfer might be blocked, at least temporarily, by one or both of the custodians.

So what can you do if such a situation presents itself? There are really three main options to choose from. The first option, and one we would NOT recommend, is taking a distribution from your old account payable to you, depositing it in your bank account and then writing a new check to your new custodian using your new name. This solution, however, is rife with potential problems.

For instance, if the distribution is coming from a plan, the plan might withhold 20% for taxes, which would have to be made up with personal funds in order to avoid the withheld amount from being subject to income tax and perhaps the 10% penalty. Plus, whether it’s coming from a plan or an IRA, you only get 60 days to complete this process. That may seem like a long enough time but there are hundreds of IRS private letter rulings asking for an extension of the 60 days that indicate otherwise.

Your second option, and a good one at that, is contacting the new custodian and letting them know about your situation. Ask them what policies, if any, they have in place for such a situation. Perhaps completing your transfer will be as simple as submitting a copy of your marriage license or court documents showing a change of name.

If for whatever reason your new custodian is hard to deal with on this issue, your third option is going back to the old custodian and trying to change your name there first. This way, when you initiate your transfer, your names will match. This option requires you to deal with the old custodian, from whom you are taking the funds, and oftentimes people prefer to avoid this option, if possible, for reasons of personal comfort.

Transferring funds between retirement accounts is but one of the many issues to consider after changing your name for one reason or another. Beneficiary forms, wills, trusts and any other important documents should also be updated. You often don’t need any of these documents after a significant event or until something has gone wrong, and that seems like a bad time to have to start dealing with this.
 

-By Jeffrey Levine and Jared Trexler