Why IRA Beneficiaries Are So Important

Posted on July 30, 2010

It’s probably one of the things you think about least when you are filling out paperwork for your IRA: the beneficiary section. However, it’s one of the most important sections and should be treated as such.

DID YOU KNOW? When you die, your IRA assets are passed to the person(s) named on your IRA beneficiary form, NOT according to who you have named in your will.

So, how do you keep this from happening?

  • Request a signed copy of your IRA beneficiary form for each IRA.
  • Make sure that a primary beneficiary and a secondary (contingent) beneficiary are named for each IRA.
  • If there are multiple beneficiaries on one IRA, make sure that each beneficiary’s share is clearly identified with a fraction, a percentage or the word “equally” if that is applicable.
  • Make sure that the financial institution has your beneficiary selections on file and that their records agree with your choices.
  • Keep a copy of all IRA beneficiary forms and make sure your financial advisor and estate attorney have copies.
  • Make sure to let the beneficiaries know where to locate your IRA beneficiary forms.
  • Review your IRA beneficiary forms at least once each year to make sure they are correct and reflect any changes during the year (due to new tax laws or major life events such as a death, birth, adoption, marriage, divorce, etc.)!

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