IRS rules about IRA beneficiaries were simplified in 2001, so now you can change your beneficiary at any time with no effect on the minimum required distribution (MRD) calculation. According to IRS rules, you can name any person or entity as your IRA beneficiary, although there are restrictions affecting the use of trusts that you'll want to discuss with your legal adviser..
If you’re married, your spouse has a major advantage as a beneficiary, since a
spouse can roll
over inherited IRAs into his or her own name, make contributions, and delay
distributions until age 70 1/2. Beneficiaries who aren’t your spouse can't roll over your IRA and they must take or distributions based on their life expectancy beginning the year after your death.
For beneficiaries without a life expectancy — such as a charity or your estate — lump-sum
distributions are required.
Each financial institution that offers IRAs has rules affecting beneficiaries. So as part of choosing where to open your account or whether to move it, you may want to investigate the beneficiary provisions that are part of the arrangement.
Stretching an IRA
If your primary beneficiary dies before you or before the
IRA assets are used up, the IRA passes to your contingent
beneficiary. You may be able to use the contingent beneficiary
designation to make IRA distributions extend over several
generations, a concept sometimes known as the stretch IRA.
