Who can be a beneficiary? You can name any person—your spouse, parents, siblings, friends, or other loved ones—as life insurance beneficiaries.
This requirement applies depending on the type of plan or the couple's residence. For example, an IRA owner does not generally require spousal consent when making withdrawals. However, they may need spousal consent if they live in a community property state and want to elect or change beneficiary designations.
Estate and income tax laws often favor naming the Participant's spouse as beneficiary. One of the benefits of naming a spouse is that your spouse can roll over the IRA to his or her name, and then choose a new beneficiary (usually a child or children).
If you were any of the following to the original owner of the IRA you inherited, you are a non-spouse beneficiary: Child of the original owner. Grandchild of the original owner. Sibling or other relative of the original owner.
Unlike other financial accounts and assets, an individual doesn't automatically become the beneficiary of their spouse's IRA. In most cases, the account holder can name a beneficiary, whether that's a child, another relative, or someone else other than their spouse.
Generally, a designated beneficiary is required to liquidate the account by the end of the 10th year following the year of death of the IRA owner (this is known as the 10-year rule). An RMD may be required in years 1-9 when the decedent had already begun taking RMDs.
The primary disadvantage of naming a trust as beneficiary is that the retirement plan's assets will be subjected to required minimum distribution payouts, which are calculated based on the life expectancy of the oldest beneficiary.
Before the Secure Act of 2019, heirs could "stretch" inherited IRA withdrawals over their lifetime, which helped reduce yearly taxes. But certain accounts inherited since 2020 are subject to the "10-year rule," meaning IRAs must be empty by the 10th year following the original account owner's death.
Non-spouse designated beneficiaries must roll the assets over to an inherited IRA and most must withdraw all the money within 10 years, as noted above.
If you reside in a “community property state” (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin), you need your spouse's consent to designate any primary beneficiary other than your spouse. This need arises from state property law.
Contribution limits for spousal IRAs
The IRS limits how much someone can contribute to an IRA each year. In 2025, the contribution limit is $7,000 per year, the same as in 2024. Additionally, workers who are 50 or older can make a catch-up contribution of $1,000 in 2025.
Retirement Accounts
However, IRAs are controlled by state law and do not automatically grant beneficiary rights to the spouse. The account owner can list whomever he/she wishes as beneficiary and change it whenever he or she wants to.
It's generally a bad idea to name more than one beneficiary, for two reasons. First, if you name your spouse and someone else as beneficiaries, your spouse loses the special benefits and flexibility they would otherwise have. Second, it complicates things.
Remember, immigration law requires you and your spouse to answer each question correctly. Keep in mind that if you are the petitioner for a green card throughout the application, the form will refer to you as the “spouse beneficiary.”
The surviving spouse should almost always be named the primary beneficiary, with the Trust designated as contingent or secondary beneficiary because of the surviving spouse's opportunity to elect a Spousal Rollover and treat the distributions as an owner rather than a beneficiary.
Estranged relatives or former spouses – Family relationships can be complicated, so think carefully if an estranged relative or ex-spouse really aligns with your wishes. Pets – Pets can't legally own property, so naming them directly as beneficiaries is problematic.
The short answer: Anyone can be a beneficiary on your IRA, including minor children. And your beneficiaries don't need to be family members. It's important that the beneficiaries listed on your Vanguard accounts match your beneficiaries' legal names when they inherit the accounts, so don't use nicknames.
An inherited IRA may be taxable, depending on the type. If you inherit a Roth IRA, you're free of taxes. But with a traditional IRA, any amount you withdraw is subject to ordinary income taxes.
Non-individual beneficiaries such as an estate, charity or certain trusts, are usually subject to either a 5-year rule, which requires distribution of the entire IRA by December 31 of the fifth year following the IRA owner's death, or the “ghost life expectancy” rule, in which RMDs are spread out over the deceased ...
Retirement accounts typically sidestep probate proceedings in California. This is primarily because they function as transfer-upon-death instruments. The crucial step here is to designate beneficiaries correctly for your retirement accounts, ensuring they receive the assets as you intended.
What is an inherited IRA? Also sometimes called a beneficiary IRA, an inherited IRA is an account that is opened when someone inherits an IRA after the original owner dies. The beneficiary may be anyone — a spouse, relative, or an estate or trust, for example.
If you're at least age 59½ and your Roth IRA has been open for at least five years, you can withdraw money tax- and penalty-free. See Roth IRA withdrawal rules.
There are a few things you can do to avoid paying taxes on an inherited IRA. The most obvious thing is to not take a lump-sum distribution. If you inherit the IRA from your spouse, wait until the required minimum distributions begin or take distributions based on your own life expectancy.