Designating Your IRA Beneficiaries: A Guide to Help You Navigate

by | May 14, 2023 | Inherited IRA | 43 comments

Designating Your IRA Beneficiaries: A Guide to Help You Navigate




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For many, their IRA or retirement account is their largest financial asset. Find out how you should designate your primary and contingent beneficiaries, and whether you should designate a trust as a beneficiary….(read more)


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When it comes to ensuring your financial future, planning is essential. One of the many tools at your disposal is an individual retirement account (IRA). By contributing to an IRA while you’re working, you’ll have a reliable source of income when you retire. Another advantage of an IRA is that you can designate beneficiaries to receive the assets in the account after your death. Here are a few key things to keep in mind when designating your IRA beneficiaries.

Choose Your Beneficiaries

The first step in designating your IRA beneficiaries is to decide who should receive your assets. You can choose anyone as your beneficiary, including your spouse, children, grandchildren, or other family members. You can also name a charitable organization if you prefer. Be sure to choose only individuals or organizations that you trust to handle the inheritance responsibly.

Know Your Options

There are two main options when it comes to designating your IRA beneficiaries: per stirpes and per capita. Per stirpes is a Latin term meaning “by the roots.” In this case, the assets are divided among your living children, with the share of any child who predeceases you going to that child’s descendants. Per capita is another Latin term meaning “by the head.” This option divides the assets equally among your children, regardless of whether any of them have children of their own.

See also  Withdrawal Strategy From a Beneficiary IRA

Establish Contingent Beneficiaries

It’s important to establish contingent beneficiaries in case your primary beneficiaries predecease you or decline the inheritance. Additionally, if you have multiple beneficiaries, you’ll need to indicate how you want the assets divided among them. This is where your per stirpes or per capita designation comes into play.

Update Your Designation

Remember to revisit your IRA beneficiary designation periodically to ensure it remains up to date. This is especially important if you experience a major life change, like marriage, divorce, or the birth of a child. Updating your beneficiary designation ensures your assets go to the people or organizations you want to receive them.

Consider Professional Assistance

Designating your IRA beneficiaries may seem straightforward, but it can be more complicated than it appears. If you’re unsure about how to proceed or have unique circumstances, it may be wise to seek the advice of a financial advisor or attorney. These professionals can help ensure your beneficiary designation aligns with your overall estate plan and financial goals.

In conclusion, designating your IRA beneficiaries is an essential part of planning for a financially secure future. Taking the time to carefully consider your options and ensure your beneficiary designation is up to date can provide peace of mind for you and your loved ones.

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43 Comments

  1. Lucky Charm

    Breathe while speaking. I get breathless listening to you. Highly stressful.

  2. David Campbell

    Hi Paul, just started watching, nice to have info I understand, my question is do I need to change my beneficiaries in my fidelity accounts, when I have a revocable trust, fidelity will distribute funds to my beneficiaries ( my children), I have spoken to fidelity several times to confirm.
    Thanks David Marion county Florida

  3. Jim Moravec

    What if a family member does not approve of the person the court chose to be administrator
    Jurisdiction Minnesota

  4. Daniel I

    If a trust holds a Roth IRA, would it still be tax free for the trust?

  5. Elizabeth Black

    I was to get my father's nestle Purina pet retirement account. Sister demanded a inheritance bank account and signed to own and control just same as another sister signed could have took all except one dollar. Hank said he would have to press charges to get them off.
    He set up for me oldest daughter only and because it was shared before and she got angry she got brother to help her steal it

  6. Francisco Lozada

    Corporate windfall profits are not the cause of inflation. Higher prices charged by corporations and sustained or increased sales volume are the reason for the windfall profits. But since the working class is earning less there have to be other companies going bankrupt or in jeopardy of going bankrupt. look at the statistics of companies with reduced or no profits.

  7. MaCoeur

    You are just brimming with priceless information. Can't even begin to tell you how much I appreciate your sharing!!!!

  8. Hoi Hoover

    My husband passed away a few years ago. How do I check how much he had in his IRA? Thank you.

  9. Cat Britz

    Thanks for your videos, Paul !!

  10. RaphaelQuixote

    Hi Paul, a small question. In discussing the accumulation trust, you mentioned the tax problem that arises because trusts that have over 12,950 dollars are taxed at 37%. But in one of your other videos you explained that there is no tax problem with inter-vivos grantor [settlor?] trusts. So could you say a few words to help us understand why see-through accumulation trusts are not grantor trusts? Also, why does this tax problem not also affect the see-through trust distributed over ten years?

  11. Janet Tokuda

    What about Roth IRAs?

  12. Janet Tokuda

    What about Roth IRA?

  13. Pete Davis

    Paul is amazing!

  14. Asuncion Dagan

    Thks I learned about the IRA beneficiaries

  15. H B

    I think in 2018 got lucky with my INH IRA. I just with a click of mouse transferred it all to another brokerage not knowing the tax consequences. My tax lady did a forensic audit and it looks like it’s just my IRA. Praying I don’t get caught!

  16. Anna Setbo

    Hello PAUL I AM LISTENING TO YOU FROM Australia

  17. HCK

    My father passed away and my father had traditional IRA and designated me as beneficiary. However, E-trade is holding his IRA didn't transfer to my beneficiary IRA. It has been already 40 days gone by and seems there is any sign of transferring processing. How long dose it take to transfer to Beneficiary IRA? When I called them ask about IRA transfer to beneficiary IRA they told me one of my social security number was wrong. So based on their guide, we corrected my social security number. I am still waiting to transfer my father's IRA to my Beneficiary IRA. Do you have any idea how long it will take to transfer to beneficiary IRA?

  18. Bill Gilbrook

    Will Trust as IRA designated beneficiary require Probate?

  19. Mark

    I doesn't take 54 minutes to explain how to designate IRA beneficiaries. It doesn't even take 54 to actually get it done.

  20. Lor Mac

    How do I set up an Trust account for a 2nd beneficiary for my husband and myself retirement accounts?

  21. Bosamma Thomas

    Hi Paul. I have a question to ask you is that I have retirement accounts in 3 previous employers. Is it wise to keep it there or transfer them to an IRA? Please advise.

  22. George M

    Hi Paul, thanks for all the info! It seems that Trusts can be very a very complicated way to implement your after death wishes. And what happens if congress decides to change the inheritance rules for IRA's again? I'm trying to calculate beneficiary designations for 2 daughters. One is my biological daughter while the other is a non legally adopted step daughter. They're both adults and I thought that my biological daughter would have different options than my step daughter. I'm getting the feeling that I was mistaken in believing that the Secure Act would make any difference on how each are required to treat the inherited IRA and SEP IRA. I haven't been able to find a strait answer as of yet. They're both responsible adults with my youngest (30), the biological one just giving birth to her 1st child. She's married to a responsible small business owner who is careful with money. I'm tempted to just leave each a 50% share in the IRA's as well as the Roth IRA which I'm still trying to make conversions to at a low tax bracket as well as contributing the maximum allowed amount while I'm still working and haven't drawn Social Security yet though I'm eligible to do so. My step daughter has 2 children from her 1st marriage which ended in a messy divorce before her 1st husband passed away. He really turned out to be much different than he seemed when they 1st married although he made a good living, he was not what I would consider good with money. She's now engaged to a seemingly nice divorcee with children who live out of state with their mother. I have all my assets with one firm and was hoping that I could simply set up my 2 daughters as primary beneficiaries and each of their children as secondary beneficiaries without either current or future husbands as part of the inheritance and only their own children as equal secondary beneficiaries if it is possible. Does this sound like something that should be an easy set up or one which would require a complicated plan? Thanks in advance for any insight or suggestions you might have.

  23. Carol Chop

    How can you know who is a well qualified attorney to help plan your estate?

  24. Klaus Gersdorf

    Is there any Tax liability for a Roth inherited IRA?

  25. Klaus Gersdorf

    Can the IRA be converted to Roth in 10 yrs? And do you still have to withdraw Roth IRA amounts? Thanks

  26. allen everhart

    I think INH means INHerited.

  27. lorilvr

    You've gotten a bit wordy and fragmented with ?s interjected. Too many commercials as a result. Please go back to more direct videos! Thanks

  28. janakiram setty

    Topics are very educational with lot of useful information.I have just regular will my assets mostly in IRA and other investments and house is paid off. I have designated beneficiaries on Ira . Should I have revocable trust to avoid probation. Thanks. J.r

  29. Rebecca Fore

    Thanks Paul very well explained

  30. Pat Currie

    Paul, I was planning to list the trust as beneficiary. Does the IRA always stay separate from the trust?

  31. Robert Guy

    What do you do with a Roth IRA. Do you put in in the Living Trust?

  32. William Kidston

    Thankyou , do you have office practicing estate planning in Philadelphia PA ? Or you can prefer someone in this field ?

  33. johndorrell1

    Paul, you are a knowledgeable and well-intended source of important legal information, but in this video you disrespected your audience by failing to say a single word about your stated topic, "How to Designate Your IRA Beneficiaries", with the implied context being under current law, until 30 minutes of your chatty and rambling 54-minute presentation had passed. You wasted your time and ours by droning on and on about what we might have done under the previous law, when what matters to us is what we can do under current law. For me personally, the entire 54 minutes of my time was wasted because I wanted to know those very specific critical words to use in actually naming ("designating") a beneficiary so that they can be assured of having the full 10 years allowed by law to distribute their inheritance. That you did not address. AT ALL. Please respect your audience in future videos by getting quickly to the point and being as clear and concise and efficient as possible in delivering the information you promised via the video's title. You'll better serve your audience and be better appreciated for your efforts.

  34. Judith Beeley

    If you sell your home to your child below market value in 2021 does this transaction have a 5 year waiting period for Medicaid since it was sold not transferred? Thank you love your informative vlogs. Judy in CA

  35. fred Sherbacow

    can you alter the benificeries of the trust

  36. ABCD EFGH

    Thank you for all the videos, they have been educational and helpful in many ways.

  37. Harry Chu

    Good video and overall content. Any insights on a Charitable Remainder Trust with cash flow to the donor?

  38. Apros 2cents

    I'm in NM, and have been assigned as a special administrator of my step dad's estate. It would be important to note that him and my mother have been divorced for 30 years and he has no surviving next of kin. What are the chances of being declared an heir to the estate as a step child.

  39. David Hooper IV

    Paul, thanks for answering my question on transferring unpaid assets into your Living Trust on this video. You're awesome!!! "HOOP"

  40. David Arthur

    Paul, thank you for the very informative material you present in your videos. You certainly heave a passion for what you do and you do it so well. I do subscribe to your channel and listen often. I have had my revocable living trust since 1992 and make an effort to stay educated on trust matters. I was hoping you were going to discuss pros and cons of naming a trust as a contingent or secondary beneficiary of an IRA. My wife is named as the primary beneficiary (100%) on my IRA and my trust is the contingent beneficiary; to which I might add we are named as co-trustees of my trust. Is there anything I should be concerned about?

  41. David W

    If a see-through Trust was established as a IRA Beneficiary, would you have to create some sort of bank account under the name of the trust to allow the transfer of funds between one financial institution to another so the trustee could then write a check to the beneficiary and hope the beneficiary claims the income on their tax fillings (Yes we are only talking about a traditional IRA for tax purpose, not a Roth IRA)

  42. Big Johnny

    What happens when both mom and dad has each other as beneficiaries but no one as secondary beneficiaries, they have a will and trust, does the Ira just go through probate?

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