Same bene on all IRAS?
This seems strange:
Disinherited by Vanguard? Check Those IRA Beneficiary Forms
Excerpt: “Vanguard has decided that, as of mid-September, it will require customers to use identical beneficiaries for all IRAs of the same type. All your IRAs holding money rolled from employer pension plans count as the same type and must have the same beneficiaries. Traditional IRAs, both pretax and aftertax, are a second type. Roth IRAs are a third.” (Forbes.com; free registration required)
Permalink Submitted by Denise Appleby on Wed, 2007-08-22 20:29
… I wonder who was in the room when this decision was made? The explanation they provided ( as indicated in the article) seems lacking—there must be more.
Can you imagine the chaos from people with copies of beneficiary forms who find out that that are not beneficiaries after-all.
Permalink Submitted by Edward Czapor on Wed, 2007-08-22 21:53
Just read the article in the Sept. 3 issue of Forbes. I have a TIRA and a Roth at Vanguard. I don’t recall receiving a letter in July explaining the change, but then again my beneficiaries are the same for both type of accounts. I don’t believe this has any effect on splitting an IRA to individual benes, or does it?
Permalink Submitted by Alan Spross on Thu, 2007-08-23 00:55
Should have no effect on establishing separate accounts post death.
But I think Vanguard’s real reasons for this are not being picked up by the financial press. With their sheer size, they must be encountering certain complaints from beneficiaries after the owner passes. One such complaint might relate to the various accounts evolving into very different values for beneficiaries at death, when the accounts may have been equal in value at one time. Another problem might be people forgetting who is named on each account and losing track as they get older. The fact that Vanguard seems amenable to backing off the requirement once they are convinced the taxpayer is on top of things seems to suggest their concern is losing track of the accounts. At present they are probably only contacting those clients immediately affected, but this is going to make it tougher for taxpayers to set up separate accounts while living to shield their beneficiaries from messing up the process later on.
I recall about 5 years ago, Vanguard made a similar effort to eliminate customized beneficiary designations.