Ex still beneficiary of retirement IRA

Don Taylorq_v2.gifDear Dr. Don,
I had money put in an IRA account for my retirement before I married. I later listed my husband as primary beneficiary and my children as secondary beneficiaries. Now that he has left me, the bank will not let me take his name off as primary beneficiary.

Why is that when it is my own money and I should be able to leave it to anyone I want? The bank said even a divorce will not change the situation. The bank said he has to sign off on the change, or a judge has to declare that he be taken off. I need some input.
-- Shirley Standoff

a_v2.gifDear Shirley,
There's a difference between what the law requires and what a financial institution may require in naming a nonspousal primary beneficiary to an IRA. Some financial institutions require the spouse to sign off on not being primary beneficiary as a matter of policy, but it's only required by law in community property states.

Nine states -- Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin -- are considered community property states by the Internal Revenue Service. In those states, community property includes real estate, tangible assets and the earnings both spouses acquired during the marriage. Assets acquired by gift or inheritance, or assets owned before the marriage, are not community property.

Your IRA may or may not be considered community property depending on when it was funded and whether you ever elected for it to become community property. You would have to discuss this with an attorney.

If you don't live or bank in a community property state, you may be able to finesse the issue prior to a divorce by moving the IRA to a provider that doesn't require the spouse to sign off on the nonspousal beneficiary. After the divorce, you wouldn't have an issue, although he may be awarded part of the account in the divorce settlement.

Read more Dr. Don columns for additional personal finance advice.


Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
30 year fixed, 0 point 4.32%  0.06 4.26%
15 year fixed, 0 point 3.36%  0.09 3.27%
5/1 ARM 3.37%  0.10 3.27%
View Rates in your area Search
Product Rate Change Last week
30K FICO-based HELOC 4.74%  0.01 4.75%
50K FICO-based HELOC 4.51%  0.01 4.50%
100K FICO-based HELOC 4.24% --0.00 4.24%
View Rates in your area Search
Product Rate Change Last week
60 month used car loan 2.86%  0.20 3.06%
48 month used car loan 2.79%  0.40 3.19%
60 month new car loan 2.94%  0.10 2.84%
View Rates in your area Search
Product Rate Change Last week
1 Year CD 0.90%  0.02 0.88%
2 Year CD 1.02%  0.01 1.03%
5 Year CD 1.59%  0.01 1.60%
View Rates in your area Search
Product Rate Change Last week
Balance Transfer Cards 15.71%  0.01 15.70%
Cash Back Cards 16.36% --0.00 16.36%
Low Interest Cards 10.91% --0.00 10.91%

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.


Jennie Phipps

Don’t let divorce ruin retirement

Divorce carefully, or as Gwyneth Paltrow says, practice "conscious uncoupling."  ... Read more

Partner Center

Connect with us