From
Your Perspective:
Managing your
retirement nest egg
Naming beneficiaries
As long as your
IRA
beneficiary — the person who has the right to the
assets
in your account — is a person and not your estate, your account’s life expectancy is potentially unlimited. That’s because although your
beneficiary
must withdraw from the account each year, the
minimum required distribution
is determined by the beneficiary’s age, which in turn determines the uniform withdrawal factor.
For example, a 35-year-old beneficiary can expect to live another 47.3 years according to official estimates, and could extend the life of the account for decades if she withdrew only the required minimum each year.
With an IRA, you have the right to name anyone you choose as beneficiary. That’s different from an
employer-sponsored plan
where you commonly must name your spouse or get your spouse’s written permission to name someone else. And if you die without naming a beneficiary for your IRA or retirement savings account, one can be named up until December 31 of the year following the year of your death, ensuring the longevity of your account.
If you name your spouse as beneficiary, he or she has rights that other beneficiaries don’t. For example, your IRA becomes your spouse’s property, which is not the case with other beneficiaries. Your spouse can also postpone required distributions until reaching 70 1/2, something other beneficiaries can’t do. And if your spouse is 10 years or more younger than you are, you’re entitled to take a smaller minimum required withdrawal each year than you’d otherwise have to take.
