A:

Whether the beneficiary of an individual retirement account (IRA) can name a successor beneficiary (second generation beneficiary) is determined by the provisions of the IRA plan document. In the last few years, most IRA plan documents that did not allow this option have been amended to allow beneficiaries to designate a succession of beneficiaries. Check with your IRA custodian regarding its IRA plan document provisions. If your current IRA custodian does not allow this option, you may be allowed to transfer your inherited IRA to one that does.

The life expectancy of the first generation beneficiary is always used to compute post-death distributions. This rule applies to second and subsequent generations of beneficiaries. For instance, if your child was the beneficiary of your inherited IRA and the child later designated someone else as the beneficiary of the IRA he or she inherited from you, then you, your child and the person he or she designated as beneficiary would all use your life expectancy to calculate required minimum distribution (RMD) amounts. (For more information on retirement plans, see Introductory Tour Through Retirement Plans. For more on RMDs, see Avoiding RMD Pitfalls.)

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS
  1. Can an IRA beneficiary roll the IRA over into another account and designate another ...

    It depends on the provision of the IRA plan document. Some (though very few) do not allow the designation of successor beneficiaries. ... Read Answer >>
  2. Upon my death, will the beneficiaries of my IRA be compelled to take the entire amount ...

    It depends. If the beneficiary of your IRA is your spouse, he or she will be eligible to transfer the amount to his or her ... Read Answer >>
  3. If a trust is named as the beneficiary of an IRA, can the trustee of that trust become ...

    While the IRA owner is alive, only the IRA owner can change the designated beneficiary of the IRA. Exceptions may apply if ... Read Answer >>
  4. My mother inherited my father's IRA. When she died, I received an account application ...

    If your brother cannot be found, you may want to check with the IRA custodian and/or the financial advisor to find out if ... Read Answer >>
  5. My spouse is the primary beneficiary of my IRA. I also have a contingent beneficiary. ...

    A spouse who is the sole primary beneficiary of an IRA can always treat the IRA as his or her own. The contingent beneficiary ... Read Answer >>
Related Articles
  1. Retirement

    Mistakes In Designating A Retirement Beneficiary

    Make sure your beneficiary designations not only reflect your intentions but also meet the requirements to be effective.
  2. Financial Advisor

    Why You Need to Find the Right IRA Beneficiary

    It definitely matters who you pick as your IRA beneficiary—and how you go about it. And in some cases, your best option may be to go with a trust.
  3. Financial Advisor

    Inherited IRA and 401(k) Rules: Don't Run Afoul

    What you need to know when it comes to the complex rules for inherited IRAs and 401(k)s.
  4. Retirement

    An Estate Planning Must: Update Your Beneficiaries

    Life changes make it time to rewrite your plan's designations.
  5. Financial Advisor

    Why Your Will Should Name Designated Beneficiaries

    Find out how to make the tough decisions when it comes to choosing who will receive your assets and how they will be paid out.
  6. Retirement

    Designating A Trust As Retirement Beneficiary

    Designating a trust as your IRA beneficiary can be beneficial, but it requires proper planning to avoid problems.
  7. Financial Advisor

    Top Estate Planning Tips for 401(k)s and IRAs

    Here's how to avoid estate planning pitfalls when it comes to leaving IRA and 401(k) assets to heirs.
  8. Financial Advisor

    How to Handle Client Beneficiary Designations

    Beneficiary designations are a critical financial planning step that can be easily overlooked. Here's how to ensure they are properly done.
  9. Retirement

    Want To Leave Money To Your Family? Stretch Your IRA

    Find out how your beneficiaries can enjoy tax-deferred growth for as long as possible.
  10. Retirement

    A Look At IRA Separate Accounting Rules

    If you are a younger multiple beneficiary, make sure you understand the RMD regulations.
RELATED TERMS
  1. Extended IRA

    An IRA that allows a second generation beneficiary to continue ...
  2. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  3. Stretch IRA

    An estate planning concept that is applied to extend the financial ...
  4. Named Beneficiary

    This term refers to any beneficiary named in a will, a trust, ...
  5. Primary Beneficiary

    A beneficiary in a will, trust or insurance policy that is first ...
  6. Inherited IRA

    An individual retirement account that is left to a beneficiary ...
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center