Beneficiary FAQs
Note: The questions and answers below generally relate to both retirement plans and individual retirement accounts (IRAs). Collectively they are referred to as accounts or retirement accounts. Where there is a distinction between plan treatment and IRA treatment the differences are pointed out. Beneficiary can refer to one or more beneficiaries.
The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) of 2019 made substantial changes to the rules for beneficiaries who inherit retirement account benefits. These FAQs describe the rules for beneficiaries who inherit accounts subject to the SECURE Act rules. Treasury Regulations pertaining to beneficiary rules, when issued, are expected to provide further clarification.
A beneficiary is the person or entity that receives your retirement account benefits upon your death.
A primary beneficiary is the person or entity designated to receive your retirement account benefits upon your death. If you specify more than one primary beneficiary, you need to specify the percentage that each beneficiary will receive in whole percentages. Remember, the percentages that each primary beneficiary will receive must add up to 100%. As long as there is a primary beneficiary still living, the account will generally go to the remaining primary beneficiary. For example, if you name two primary beneficiaries and one dies before you do, the remaining primary beneficiary will inherit the entire account. (See: What happens to my account if one of my named beneficiaries dies before I do?)
Please note that federal or state law as well as plan documents may require a married participant to obtain spousal consent in order to name a non-spouse as beneficiary.
A contingent beneficiary is the person or entity designated to receive your retirement account upon your death if all the primary beneficiaries have died before you. In other words, your contingent beneficiary receives the benefit only if there are no remaining primary beneficiaries living at the time of your death.
If you specify more than one contingent beneficiary, you need to specify the percentage that each contingent beneficiary will receive in whole percentages. Remember, the percentages that each contingent beneficiary will receive must add up to 100%.
As long as there is a contingent beneficiary still living, the account will generally go to the contingent beneficiary. For example, if you name two contingent beneficiaries and one dies before you do, the remaining contingent beneficiary will inherit the entire account. (See: What happens to my account if one of my named beneficiaries dies before I do?)
Attach additional pages and make sure you identify who is a primary beneficiary and who is a contingent beneficiary.
If you selected the “per Stirpes” box on the beneficiary election form, any living children of the deceased beneficiary would divide the share of your retirement account equally. This is true for either a primary beneficiary or a contingent beneficiary.
If you do not select the “per Stirpes” box, the account will be divided among the remaining named beneficiaries in that category of beneficiaries.
A “Designated Beneficiary” is a person who is named as a primary or contingent beneficiary. While you can name an entity or a trust as a primary or contingent beneficiary, neither can be a Designated Beneficiary. Only individuals can be Designated Beneficiaries. Prior to the SECURE Act any Designated Beneficiary had the right, under the Internal Revenue Code (the Code), to stretch payments inherited from a retirement account over his or her lifetime. As a result of the SECURE Act a Designated Beneficiary of someone who dies January 1, 2020 or later must generally take distribution of an inherited retirement account benefit by the end of the 10th calendar year after the calendar year of the account owner’s death. Post the SECURE Act a person must be an Eligible Designated Beneficiary to stretch payments over a period longer than 10 years.
An Eligible Designated Beneficiary is a person you name as a beneficiary (a Designated Beneficiary) who is either:
- Your surviving spouse
- An individual who is not more than 10 years younger than you are
- A disabled or chronically ill individual, or
- Your minor child until the child reaches the age of majority
Eligible Designated Beneficiary Status is determined as of the date of the account owner’s death.
The 10-Year Rule was created by the SECURE Act. It limits the time a Designated Beneficiary, who is not also an Eligible Designated Beneficiary, can stretch inherited retirement account payments over a period longer than 10 years from the date of the account owner’s death.
A Non-Eligible Designated Beneficiary is a person that you name as your beneficiary, who does not meet one of the descriptions of an Eligible Designated Beneficiary.
A Non-Designated Beneficiary is an entity named as your beneficiary or an entity or a person who inherits your account but was not named by you. Examples of Non-Designated Beneficiaries that you might name are charities, trusts and other entities that are not individuals. If you do not name a beneficiary or your named beneficiary dies first and no other person qualifies as a Designated Beneficiary, the person who inherits the account through your estate is not a Designated Beneficiary. For example, a person who inherits your account through your estate is a Non-Designated Beneficiary.
If you do not name a beneficiary either the underlying contract for the investment, the plan document, or federal or state rules will determine who receives your retirement account benefits. Failure to name a beneficiary often results in the entity or party who inherits the account being treated as a Non- Designated Beneficiary.
Eligible Designated Beneficiaries may take distributions from inherited accounts stretched over their life expectancy.
Minor child beneficiary of the deceased owner may take distributions over his or her life expectancy while a minor. Upon attainment of his or her majority, the adult child must take the remaining benefit by the end of the 10th calendar year after he or she attains the age of majority.
Non-Eligible Designated Beneficiaries must take distributions from inherited accounts by the end of the 10th calendar year that includes the 10th anniversary of the account owner’s death.
Non-Designated Beneficiaries must take distribution from inherited accounts by the end of the fifth year after the account owner died, if the account owner died before his or her Required Beginning Date. If the account owner died after his or her Required Beginning Date, the law permits payment to cover the remaining life expectancy of the deceased account owner. It is important to note, however, that the underlying plan document or the investment contract may require a shorter time period than the life expectancy of the deceased owner.
Additionally, if an estate is the named beneficiary, it is likely the beneficiaries of the estate will have to take distributions over a shortened time period because it is unusual to keep an estate open for longer than a year or two.
Generally, a will does not control who inherits your retirement account. Retirement accounts are generally non-probate assets and they pass according to your beneficiary designation, according to plan terms, or according to state or federal law default rules. If you name your estate as your beneficiary, or if you do not name any beneficiary, the account may default to your estate and your will or state law may control who inherits your account but he or she will not qualify as a Designated Beneficiary.
Beginning in the year an IRA owner attains age 72 (age 70½ if born before July 1, 1949) the IRA owner of a traditional (non-ROTH) IRA account is required to begin withdrawing and paying taxes on the distributions. Such distributions must begin by the Required Beginning Date, which is April 1 of the calendar year following attainment of such age.
For ROTH IRA accounts the owner is not required to take Required Minimum Distributions during the owner’s lifetime.
For non-IRA retirement accounts the required distributions are generally triggered by the later of attainment of age 72 (age 70½ if born before July 1, 1949) or retirement. However, if a retirement plan participant is also a 5% owner of the employer, then required distributions begin upon attainment of age 72 (age 70½ if born before July 1, 1949) whether the participant is retired or still working.
A ROTH account within a retirement plan account is subject to Required Minimum Distributions.
Required distributions are based on the prior December 31 balance in each account subject to such distributions. For example: if you attain age 72 in 2023, your first distribution year is 2023 and your required beginning date is April 1, 2024. Your 12/31/22 account balance is used to calculate your 2023 distribution (due on or before 4/1/2024). Your 2024 distribution is calculated based on your 12/31/2023 balance and is due by 12/31/2024. More detailed information can be found on the IRS website at www.IRS.gov. Use the search box to look for required distributions.
The Required Beginning Date for Required Minimum Distributions is April 1 of the calendar year after the account owner has met all the requirements described above in the Required Minimum Distribution section.
For IRA and 5% or more owners of the employer sponsoring a retirement plan, the Required Beginning Date is April 1 of the calendar year following the year the account owner attains age 72 (age 70½ if born before July 1, 1949).
For plan retirement accounts the Required Beginning Date is generally April 1 of the calendar year following the later of the year the account owner attains age 72 (age 70½ if born before July 1, 1949) or retires. (See exception above in the note about 5% or more owners.)
A trust can be named as your beneficiary, but since it is not an individual, the trust generally qualifies as a Non-Designated Beneficiary. For Non-Designated Beneficiaries where the account owner had not reached the Required Beginning Date, the account will generally have to be distributed and taxed by the end of the fifth calendar year after the account holder passes away. If the owner dies after the Required Beginning Date payments must be made no less frequently than over the remaining life expectancy of the deceased account owner.
Bear in mind that the rules described are the Internal Revenue Code rules. It is possible for a plan document or an investment contract to require more rapid payment to a Non-Designated Beneficiary than the law would require.
Please note there are exceptions for beneficiaries of trusts that meet the criteria in the Treasury Regulations for a “look-through trust” or “see-through trust.”
The “at least as rapidly” rule means an inherited account must be distributed and taxed to a beneficiary at least as rapidly as it would have been over the life expectancy of the account owner and beneficiary. This rule applies to Non-Designated Beneficiaries and to Eligible Designated Beneficiaries who inherit accounts after the owner had reached his or her Required Beginning Date. Where an entity inherits, the applicable life expectancy is that of the deceased owner.
A trust can only control who inherits your account if it is named as beneficiary of the account. Since the trust is not an individual it is generally a Non-Designated Beneficiary even though you name the trust as your beneficiary. The beneficiary of the trust may or may not qualify as an Eligible Designated Beneficiary or a Non-Eligible Designated Beneficiary. Only individuals can be Eligible Designated Beneficiaries or Non-Eligible Designated Beneficiaries.
Please note there are exceptions for beneficiaries of trusts that meet the criteria in the Treasury Regulations for a “look-through trust” or “see-through trust.”
The “at least as rapidly” rule means an inherited account must be distributed and taxed to a beneficiary at least as rapidly as it would have been over the life expectancy of the account owner and beneficiary. This rule applies to Non-Designated Beneficiaries and to Eligible Designated Beneficiaries who inherit accounts after the owner had reached his or her Required Beginning Date. Where an entity inherits, the applicable life expectancy is that of the deceased owner.
Generally, neither a pre-nuptial agreement nor a post-nuptial agreement nor a marital property agreement will control who inherits your retirement account benefits when you die. Methods available to control who inherits your account when you die include: a beneficiary designation form on which you name your retirement account beneficiary, and which is delivered to the Plan Administrator or the agent of the Plan Administrator; default language in either the underlying investment contract or the plan document; or, state or federal law.
Generally, a divorce decree does not control who inherits your plan account when you die. Plan benefits can generally be divided only by a Qualified Domestic Relations Order or a Domestic Relations Order as described in Section 414(p) of the Internal Revenue Code. A divorce decree that directs a party to the divorce to name the former spouse as beneficiary is generally not binding on the plan.
If you have been awarded a retirement account in a divorce action it is important to have the account divided and handed over to the Alternate Payee as soon as possible after the divorce is final. Failure to divide a retirement account with a Qualified Domestic Relations Order or Domestic Relations Order can result in loss of the benefit to the Alternate Payee.
If you have been awarded an IRA in a divorce action it is important to have the account divided and handed over to the new owner as soon as possible after the divorce is final. For IRA accounts no Qualified Domestic Relations Order is required, however the institution holding the account will probably need a certified copy of the divorce decree as well as an assignment from the account owner in order to divide the account. Failure to divide a retirement account on a timely basis can result in loss of the benefit to the party to whom it was awarded.
A divorce decree directs the parties to a divorce to take action. It is not directed to the custodian of an IRA account. An IRA does not require a Qualified Domestic Relations Order or Domestic Relations Order to divide the account pursuant to a divorce decree. If an IRA account is to be divided pursuant to a divorce decree or property settlement agreement, the account owner should direct the custodian to divide the account. Then the owners of each IRA should complete new beneficiary designations for their accounts.
Generally, when the estate is the beneficiary the accounts must be distributed and taxed no later than the end of the fifth calendar year after the year in which the account owner dies if it was before the owner’s Required Beginning Date, or over the life of the owner under the “at least as rapidly rule” if the account owner had reached the Required Beginning Date.
It is important to note that estates are rarely kept open much more than a year from the date the estate is opened. This may result in a more rapid payout than would be allowed by the Internal Revenue Code. Additionally, plan documents and underlying investment contracts may require a more rapid payout to beneficiaries than the law would permit.
Plans that are subject to ERISA*, as well as some non-ERISA covered plans, require a spouse to consent to any primary beneficiary that is not the surviving spouse.
There is a limited window of time when a named beneficiary can waive his or her right to receive a retirement account benefit and avoid adverse tax consequences. The account would then be distributed as if the party who waived the benefit died before the account holder. The party who waives a benefit has no control over who will receive the retirement account benefit.
No, the party who waives a benefit has no right to decide who will receive the benefit.
It depends on the powers granted in the POA as to what rights the agent can exercise. If you want someone to be able to do something or not to be able to take a particular action such as to be able to change your beneficiary designations, such direction must be specifically described in your POA.
If the trust named as primary beneficiary does not exist, the account will go to the contingent beneficiary. If there is no contingent beneficiary, the account will default under the rules of the investment, the plan or state or federal rules.
If an estate is the primary beneficiary but no estate is opened your account may go to your contingent beneficiary. The result will probably depend on plan provisions and state laws. If there is no contingent beneficiary, the account will default under the rules of the investment, the plan or state or federal rules.
If you do not name a new beneficiary before you pass away, your former spouse may inherit your benefit. The answer to this will depend upon the provisions in the plan document and state and federal laws.
Some states have statutes that revoke a former spouse as a named beneficiary upon divorce; however, states vary as to the timing of the divorce and the existence of the revocation rule. Additionally, such a revocation rule may not apply to a plan covered by ERISA. It is also possible that a plan document would provide for revocation of a former spouse as a beneficiary. The best thing to do in case of a divorce is to update your beneficiary election and provide it to the Plan Administrator or agent of the Plan Administrator shortly after a divorce.
You should review and consider updating your beneficiary elections at least every 12-18 months and any time something changes in your situation that would impact who you would like to inherit your account. The SECURE Act became effective January 1, 2020, so every account holder would be well advised to review and consider updating existing account beneficiary elections. Some specific examples of times you should review your beneficiary elections are:
- if you have additional children
- if you adopt children
- if a named beneficiary passes away
- if you create a trust for some or all your assets
- if your marital status changes
- if the laws governing beneficiaries change
Minors are not eligible to make contracts and generally cannot control financial accounts. Depending upon the state of residence a child generally becomes an adult for financial management purposes between ages 18 and 21. Consequently, all 50 states have laws concerning gifts to minors often referred to as the “[State] Uniform Gift to Minors Act”, “[State] Uniform Transfers to Minors Act” or something similar. If you name a minor as beneficiary, you may want to work with an estate planning professional to make sure that your specific goal will be accomplished.
Additionally, the SECURE Act identifies a minor child of the account owner as an Eligible Designated Beneficiary. The minor child can generally take distributions over his or her life expectancy until attaining the age of majority. When the child attains the age of majority the distribution requirement switches to the 10th anniversary year of attaining the age of majority.
It is possible to designate a minor beneficiary in language similar to the following: “[name of adult you nominate to act as custodian for your minor child] as custodian for [name of minor] under the [name of state] Uniform Gifts to Minors Act.”
It is important to note that only the minor child of the account owner can be an Eligible Designated Beneficiary under the rules of the SECURE Act. A grandchild may be a Designated Beneficiary but not an Eligible Designated Beneficiary. Consequently, a grandchild would be subject to the 10-year rule for distribution of the inherited account.
If you decide to name a minor as a primary or contingent beneficiary, you should consider obtaining expert tax and legal advice to insure that your elections will meet your objectives.
If you can update your beneficiary information online, you can do this by going to your profile and selecting My Beneficiaries from the dropdown menu. Otherwise, a “Beneficiary Designation Form” can be printed and submitted to Corebridge for updating.
Note: Certain plans require that if you are married your spouse must consent to any non-spouse beneficiary. Under the terms of certain plans if you die before your payments begin your spouse is entitled to a preretirement survivor annuity of no less than 50% and no more than 100% of the value of your account. Your spouse can generally waive the right to the preretirement survivor annuity benefit and elect a different form of benefit under the terms of the plan. If you are married and you die after payments begin your spouse’s benefits will be determined by the payment option elected as well as plan, federal and state rules.
Additionally, if you are married the terms of the plan and/or the rules governing the plan may require your spouse to be your primary beneficiary unless your spouse has waived that right.
If a spousal consent is required a pre-filled Beneficiary Designation form will be provided for you to view and print in order to obtain signatures.
When a spousal consent is required to name a non-spouse beneficiary, your spouse’s signature must be witnessed by either the Plan Administrator or a Notary Public.
Mail or fax the form back to Corebridge for your request to be completed. Please fax the completed form to 1.877.202.0187 or mail to the address below for processing:
Corebridge Retirement Services
P.O. Box 15648
Amarillo, TX 79105-5648
If your plan requires spousal consent and you are legally separated from your spouse, you will need to provide the beneficiary election form to your plan administrator along with court documents pertaining to your legal separation in order to name a non-spouse beneficiary.
If your spouse is missing you will need to provide information to the plan administrator who is charged with the responsibility of determining if the spousal consent is necessary on a beneficiary election that names a non-spouse.
If you are not married, or the plan does not require your spouse to consent to a non-spouse beneficiary, you may be able to update your beneficiaries online.
Yes, Corebridge will mail a confirmation letter to your address of record or email when a beneficiary is updated based on your selected preferred communication delivery method. Additionally, beneficiary updates will appear on your next quarterly statement.
* The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for pension plans in a private industry. Many employer-sponsored retirement plans are subject to ERISA, however individual retirement accounts (IRAs) and public employee plans are not subject to ERISA.