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)

RELATED FAQS

  1. What is fiduciary liability insurance, and what are its benefits?

    Understand what fiduciary liability insurance is, what companies or individuals can benefit from having it, and when it is ...
  2. Should I purchase a master limited partnership (MLP) in my retirement account?

    Learn why investors may have to pay taxes on dividends from master limited partnerships, or MLPs, held in individual retirement ...
  3. What are the tax implications of owning a master limited partnership (MLP)?

    Learn about the tax benefits of owning units in a master limited partnership, and understand how distributions are treated ...
  4. How should I invest the money I keep on my IRA?

    For individuals who are just starting to save, certificates of deposit can be a good place to start, but the interest rates ...
RELATED TERMS
  1. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  2. Contingent Beneficiary

    1. A beneficiary specified by an insurance contract holder who ...
  3. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  4. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  5. Gold IRA

    Definition of Gold IRA
  6. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...

You May Also Like

Related Articles
  1. Professionals

    Target Date Funds: More Popular, Cheaper ...

  2. Trading Strategies

    Top 7 Roth IRA Stocks for 2015

  3. Professionals

    Are Longevity Annuities in 401(k)s a ...

  4. Professionals

    Why Retirement Advice Is Better But ...

  5. Professionals

    Coming Soon: Private Equity In 401(k) ...

Trading Center