A:

While the IRA owner is alive, only the IRA owner can change the designated beneficiary of the IRA. Exceptions may apply if there is an attorney-in-fact, in which a power of attorney includes provisions that appoint that agent to act on the IRA owner's behalf. Similar exceptions apply to conservators, who can be appointed by a court to take care of legal matters for an IRA owner who is unable to do so.

After the IRA owner's death, the designated beneficiary, including a trust beneficiary, has the option of disclaiming the inherited assets. If the disclaimer is qualified, the assets will generally pass to the other primary beneficiary. If there is no other primary beneficiary, the contingent beneficiary will be treated as the designated beneficiary. If there is no other primary or contingent beneficiaries, the beneficiary will be determined according to the default provisions of the IRA plan document.

Beneficiaries should consult with their tax professional before disclaiming inherited assets.

For more information about inherited assets, see Disclaiming Inherited Plan Assets, Inherited Retirement Plan Assets - Part 1, Inherited Retirement Plan Assets - Part 2 and Refusing An Inheritance.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS
  1. Can IRAs be held jointly by spouses?

  2. 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 >>
  3. Can the non-spouse beneficiary of an IRA name a successor beneficiary?

    Whether the beneficiary of an individual retirement account (IRA) can name a successor beneficiary (second generation beneficiary) ... Read Answer >>
  4. Why do I need to turn my inherited IRA over to the estate?

    My mother had an IRA and named me as the beneficiary. I am now being told, from the executor of her will, that I need ... Read Answer >>
  5. Can I put my IRA in a trust?

    Learn the proper way to transfer ownership of your IRA to a trust. Consider how naming the trust as a beneficiary affects ... Read Answer >>
  6. 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 >>
Related Articles
  1. 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.
  2. Retirement

    Refusing An Inheritance

    Contrary to popular belief, inheriting assets isn't always a good thing. Find out what to do if you want to disclaim them.
  3. Retirement

    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. 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.
  5. 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.
  6. Financial Advisor

    An Estate Planning Must: Update Your Beneficiaries

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

    How Advisors Can Protect Inherited IRAs

    A new Supreme Court ruling has some financial advisors rushing to set up trusts to help protect inherited IRAs. Is that necessary?
  8. Personal Finance

    Who is a Beneficiary?

    A beneficiary is a person or entity that receives funds, assets, property or other benefits from a trust, will, or life insurance policy.
  9. 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.
  10. 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.
RELATED TERMS
  1. Inherited IRA

    An individual retirement account that is left to a beneficiary ...
  2. Secondary Beneficiary

    A person or entity that inherits assets under a will, trust or ...
  3. Primary Beneficiary

    A beneficiary in a will, trust or insurance policy that is first ...
  4. Alternate Beneficiary

    In a will, an alternate beneficiary is usually named in case ...
  5. Named Beneficiary

    This term refers to any beneficiary named in a will, a trust, ...
  6. Beneficiary Clause

    A beneficiary clause is a provision in a life insurance policy ...
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center