Can a IRA plan document do this?
If no bene’s are named can the plan doc then say they will make the surviving spouse if alive the first bene in line and if no spuuse the children next in line be named……….In other words the benes are being determined post death and with proof……..Can this be done to get around the problems associated with not having a designated bene? and therefore no stretching IRA problems………………..Thanks Michael
Permalink Submitted by Andrea Cortes-Comerer on Mon, 2008-03-24 20:13
Yes, the custodial agreement may specify default beneficiaries in the event that no beneficiaries are named. In fact, all documents specify who is to receive the money. It’s likely that the documents you have dealt with in the past specify that the estate is the default owner, which certainly leads to problems more often than not.
Permalink Submitted by Michael Hassett on Mon, 2008-03-24 21:27
If what you say is true and the plan doc allows for naming a bene post death then why dont all Plan docs do this for the benefit of thier clients……….I find it hard to believe you are right and when the IRS says “if bene is not an individual”then these rules apply..at death there is no bene and its at that time the IRS makes a determination……..Thats my view .I would like any more opinions to get further clarification..Thank you for your input
Permalink Submitted by Alan Spross on Mon, 2008-03-24 21:36
See the attached retirement dictionary link to Designated Beneficiary. Note that if the IRA beneficiary clause defaults to a person that CAN be identified such as a spouse or children, these default beneficiares are considered designated beneficiaries, and the RMD stretch can apply. However, if the agreement default to a non individual beneficiary, typically the estate, the estate beneficiaries do NOT get the same consideration.
http://www.retirementdictionary.com/designated-beneficiary.htm
Permalink Submitted by Bruce Steiner on Tue, 2008-03-25 18:21
Some default to the estate because the person’s Will is the best evidence of how the person would have wanted his/her assets to go (and absent a Will, the state’s intestacy law is the next best evidence of how someone would have wanted his/her assets to go).
Others default to the spouse because spouses can roll the benefits over into his/her own IRA, and presumably if the person knew that, he/she would have named the spouse as beneficiary.