By: W. Bailey Smith, Esq.
An IRA is an individual retirement account. It is owned by you, an individual, not your trust. An IRA is a retirement account and is similar to a 401(k), a 403(b) account, or a pension plan. These same disaster-proof rules apply to all 3 of these accounts.
- These are usually tax-deferred accounts and pass by way of beneficiary designation forms pursuant to contracts with particular institutions. As a general rule you should name your spouse as your primary beneficiary (or anyone you want if you are single), and name your adult children as secondary beneficiaries.
- Name a second “contingent” beneficiary in case your primary beneficiary dies and to allow for disclaimer opportunities under the IRA rules to do estate planning after you pass on.
- Get copies of every beneficiary designation form for each and every IRA.
- Keep copies of the beneficiary designation forms with your other estate planning documents and give them to your estate planning attorney and financial planner.
- Tell the IRA beneficiaries where you placed your beneficiary designation forms.
- Review your beneficiary designation forms yearly to ensure they are correct and reflect current tax changes and major changes including if somebody forgets your birthday.