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IRA Financial Blog

Real Life Case of Why You Need to Name an IRA Beneficiary – Episode 396

Adam Talks

In today’s episode of Adam Talks, Adam Bergman, Esq. discusses Private Letter Ruling 202322014 and why you need to keep your IRA beneficiary form updated.

Why Naming a Spouse as an IRA Beneficiary is so Important

In today’s podcast, Adam Bergman discusses the importance of naming a spouse as the beneficiary of an IRA. He refers to a specific private letter ruling (PLR 202322114) that highlights the potential issues that arise when a spouse is not named as the beneficiary. The ruling revolves around a case where an individual died without designating a beneficiary for his IRA, resulting in the estate becoming the beneficiary. The surviving spouse, who was the personal representative of the estate, sought to direct the IRA benefits to herself. She wanted to roll over the proceeds into an IRA in her name to avoid reporting the distribution as income.

Under the current rules, an estate typically has five years to distribute IRA funds. However, the surviving spouse in this case wanted to stretch the distributions over a longer period of time. The IRS granted her request to move the IRA into her name, allowing her to take distributions based on her life expectancy. Bergman emphasizes that this outcome was possible because she was the sole beneficiary and personal representative of the estate. He advises individuals to ensure their surviving spouse is named as the primary beneficiary of their IRA, as this can prevent complications and allow for the lifetime stretch option.

Bergman also points out that it is important to have a valid beneficiary form and keep a record of it to avoid situations where an ex-spouse remains the beneficiary. He acknowledges that sometimes a surviving spouse may not want to administer the estate and suggests involving a lawyer to assist with the process. Co-personal representatives or executors can also be named, and the will can specify whether the surviving spouse can act alone or not. The key takeaway from this discussion is to name the desired beneficiary, preferably the surviving spouse, and ensure they have control over the estate to facilitate the rollover of IRA funds.

Overall, Bergman’s summary of the private letter ruling serves as a reminder to review and update beneficiary forms to avoid complications and ensure the desired distribution of IRA assets. To learn more, please listen to the podcast.


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