Choosing your retirement plan beneficiary is one of the most far-reaching financial decisions you can make, yet most people give it very little thought. But if you want control over where the retirement savings go when you’re gone — and you want to protect your heirs from unfavorable tax consequences — there is actually plenty to think about.

The process of choosing a 401(k) or IRA beneficiary seems straightforward enough. When you open a retirement account, you complete a beneficiary designation form. But according to nationally renowned IRA expert Ed Slott, people often fill in a name and years later can barely remember the choice they made.

Choose beneficiaries carefully

For Slott, the main consideration is a simple one: “Who do you really want to get this money?” For most married people, leaving the account to a spouse makes the most sense.

“The spouse has the best options by far,” says Slott, a Rockville Centre, New York-based CPA who trains financial advisers in IRA and estate planning. “A spouse can roll (the account) over and treat it as his or her own.”

But there may be situations in which the obvious choice is not the ideal one for you. For instance, the required minimum annual distribution from the fund, and the taxes owed on it, is likely to be lower for your children than your spouse, because the amount is calculated according to the account owner’s life expectancy.

“If you could load up your spouse with enough other assets, it might work out better if your spouse gets life insurance or all of your other assets (instead of the retirement account),” Slott says.

Know rules for nonspouse beneficiaries

By law, if you are married and you decide to leave your retirement plan to someone other than your spouse, you must obtain a notarized signature from your spouse showing agreement.

Unlike spouses, nonspouse beneficiaries cannot roll over an inherited retirement account into their own IRA, but they may be able to do a trustee-to-trustee transfer of a 401(k) into a so-called “inherited IRA.” While your spouse can do a rollover and thus delay taking contributions until reaching retirement age, nonspouse beneficiaries have just five years after your death to take the money out. If they take the money in a lump sum by the end of the fifth year following the account owner’s death, they will pay ordinary income taxes on the entire amount. If they elect to have the money paid out over their lifetimes via the inherited IRA, they will pay ordinary income taxes on the amount they receive each year.

If you are leaving the account to multiple heirs, you need to indicate who gets what portion.

“Sometimes people just list a bunch of names, and I’ve had some horror stories where the bank was only willing to pay the first one named because (the account owner) didn’t give a percentage for each heir,” Slott says.

Consider your heirs’ financial skills

If you’re concerned that your intended heirs lack financial savvy and need to be protected from themselves or others, you might consider leaving your retirement account to a trust, especially if it contains a large amount.

“Nobody wants to leave a $5 million IRA to an 18-year-old,” Slott says. “So you leave it to a trust and appoint a trustee who will dole it out.”

Karen Geiger, a certified retirement financial adviser in Akron, Ohio, has seen cases in which children inheriting a retirement fund from some clients “just cash it and run.” She agrees the solution is to put the money in a trust to be paid out to young beneficiaries over time “so that they don’t blow it.”

But Geiger warns that distributions from a retirement fund left to a trust generally must be taken out and taxed within five years.

Don’t leave money to your estate

Only in extremely rare circumstances is it ever a good idea to leave your retirement account to your estate.

“You lose the tax benefits of extending distributions over a child or grandchild’s life,” Slott says. “The money has to come out much sooner. … It’s now subject to probate. It’s subject to a will contest. And it might go to the wrong people.”

Geiger agrees that such a move is usually ill-advised. “I have some clients who are single males with no children,” she says. “I’ve been trying to talk them into leaving (their retirement savings accounts) to a charity.”

Keep your paperwork up-to-date

With each major life event — a marriage, the birth of a child or grandchild, a divorce, the death of a close family member — you should review your beneficiary form and update it if needed.

Consult with a qualified financial adviser, and make sure you clue your family in on your intentions. The most important thing for them to know before you go, says Slott, is where you keep the beneficiary form.

“Even if you’ve named the beneficiaries, if (they) can’t find the form, it’s treated the same as if you didn’t name them,” he says.

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