Guide
Beneficiaries and inherited accounts
The form that overrides your will — and the rules heirs must follow.
Your beneficiary designation is one of the most powerful documents you will ever sign — it generally controls who inherits the account, overriding your will. Yet it is one of the most neglected.
Why designations override wills
Retirement accounts pass by beneficiary designation, not by your will or trust, unless no valid beneficiary exists. An outdated form can send an account to an ex-spouse or bypass the people you intend. Review designations after every major life event.
Beneficiary categories
- Eligible designated beneficiaries — surviving spouses, minor children of the owner, disabled or chronically ill individuals, and beneficiaries not more than ten years younger. They generally keep life-expectancy (“stretch”) options.
- Designated beneficiaries — most other individuals, generally subject to a ten-year rule.
- Non-designated beneficiaries — estates and most entities, with more restrictive timelines.
The ten-year rule
Many non-spouse individual beneficiaries must empty the inherited account by the end of the tenth year after death. Depending on whether the owner had begun RMDs, annual distributions may also be required within that window. There is no single universal timeline — the facts drive the result. Requires tax review
Spousal options
A surviving spouse has the widest set of choices, often including treating the IRA as their own — options a non-spouse does not have.
Trusts as beneficiaries
Naming a trust can provide control and protection but adds complexity; the trust must be drafted carefully to preserve favorable distribution options. Work with an estate attorney. Requires legal review
Inherited Roth accounts
Inherited Roth IRAs still have distribution-timing rules, but qualified withdrawals can remain tax-free — a meaningful advantage for heirs.
FAQ
Do I have to take everything at once?
Usually not — but the required pace depends on your category and the account type.
Can I roll an inherited IRA into my own?
Generally only a spouse can. Non-spouses use an inherited (beneficiary) account.
What if no beneficiary is named?
The account passes under the custodial agreement’s default terms or to the estate, often with less favorable timing.
Sources include the Internal Revenue Service and U.S. Department of Labor. This guide is general information, not tax or legal advice; confirm specifics with a qualified professional.
Educational only. This page is general information, not individualized investment, legal, or tax advice. Rules depend on your account type, transaction, tax year, and circumstances — consult a qualified professional.