If I pass away, will my retirement plan go to my spouse tax free?

By Denise Appleby AAA
A:

If your spouse is the designated beneficiary of your retirement plan, the assets will pass to him or her tax free. The general rule stipulates that upon the death of a retirement plan participant or IRA owner, the retirement plan (or IRA) assets pass to the designated beneficiary tax free. Note that this transfer of ownership is not a transaction that will be reported to the IRS. No reporting will be done to the IRS until the beneficiary takes a distribution of assets from the retirement account.

You should consult with your plan administrator (or IRA custodian or trustee, for IRAs) regarding their policies and procedures to effect this transfer of ownership. Some will allow the beneficiary to retain the assets in the account owned by the deceased and re-title the account to include the name of the beneficiary, while others require the beneficiary to establish a separate account to which the inherited assets will be credited. For either option, any distribution(s) that occur after the death of the participant should be reported under the beneficiary's tax ID number.

This question was answered by Denise Appleby (Contact Denise)

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