Meager Income

Pay Off Debt, Retire Comfortably on Meager Income, Win the Lottery, Not Necessarily in that Order

A $400,000 Mistake!

Posted on | January 15, 2015 | No Comments

The account holder thought he had ensured that his children would receive his IRA upon his passing. Unfortunately, because the account holder did not fill out the beneficiary form correctly, the funds were disbursed in accordance to his will instead of the IRA beneficiaries as he had intended. He should have just listed his children and the percentage each was to receive but instead he referred to his will which invalidated the beneficiary designation. Hence, his spouse of two months received the $400,000 IRA.

The article makes some recommendations to make sure that account holders set the beneficiary correctly. I found point #2 might be useful to me someday:

2) When filling out a beneficiary form, don’t forget to designate percentages next to the names of your beneficiaries. You can also write “in equal shares” if you want the assets to be distributed equally. Also know that adding “per stripes,” Latin for “bloodline,” after your beneficiaries’ names and the percentages, will ensure that it will go to your beneficiaries’ descendents.

In the article, Jeanie Ahn reminds the reader that the beneficiary forms can be used so that the assets in the accounts bypass the probate process and the recipients are able to receive the funds quickly.

The full story can be found here.

Before I forget, I need to review the beneficiary designations on my accounts.

When was the last time you reviewed the beneficiary designation on your IRA? Roth IRA? 401K?


Leave a Reply

  • Recent Tags

  • Categories

  • Recent Posts