You Usually Don’t HAVE to Name Your Spouse as IRA Beneficiary

Tuesday, August 26, 2014

By Joe Cicchinelli, IRA Technical Expert

Follow Me on Twitter: @JoeCiccEdSlott

If you are married and participate in your employer’s ERISA covered retirement plan, such as a 401(k) or pension plan, your spouse must generally be the beneficiary of that company plan. Even if you didn’t name your spouse as the beneficiary, possibly because you weren’t married at the time you started working there, your spouse is usually automatically treated as the beneficiary of your company retirement plan.

Why does that happen? Typically your spouse must be the beneficiary under pension law (ERISA) and the Tax Code. In fact, if you want to name someone other than your spouse as your plan’s beneficiary, you will need to get your spouse’s written consent to do so. But what about your IRA? Do you have to name your spouse as the beneficiary of your IRA? The answer is usually no.

If you have an IRA, the rules are different. The spousal rules under ERISA don’t control IRAs and the Tax Code doesn’t require you to name your spouse as the beneficiary of your IRA. So, in general, you can name anyone as the IRA beneficiary without having to get your spouse’s permission. However, your state’s law may give your spouse rights to some or all of your IRA or require spousal consent to name a non-spouse IRA beneficiary.

If you’re married and live in a community property state, your state’s law may recognize your spouse as the beneficiary of some of your IRA. Accordingly, you likely need to get your spouse’s written consent if you want to name a non-spouse beneficiary of your IRA.

According to IRS Publication 555 Community Property (revised January 2014) the community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In Alaska, a married couple can make a community property election. Oftentimes, your IRA custodian’s beneficiary form will have the spousal consent language on the form to make it easier for you to get spousal consent and name a non-spouse beneficiary.

While there are only 9 community property states (10 if you count Alaska), the other 40 states are not. So, in most cases, you don’t need spousal consent to name a non-spouse beneficiary of your IRA. Ultimately, it’s your responsibility to get spousal consent if it’s required by state law. You may need to speak with an attorney who is knowledgeable in the community property rules.
 

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