Why You Should Undergo a Beneficiary Designation Review

Lauren Smith |
Here’s what you need to know about the Secure Act.

How We Can Help You | Book an Initial Consultation


Before the Secure Act was passed, the stretch IRA let beneficiaries withdraw from an inherited IRA at any point in their life. However, now that the Act has passed, that’s no longer the case for some individuals.

There are three types of beneficiaries in an IRA: non-designated beneficiaries, non-eligible designated beneficiaries, and eligible designated beneficiaries.

Non-designated beneficiaries of an IRA aren’t individuals, but rather institutions like charities and estates. Non-eligible designated beneficiaries include grandchildren and older children. With the passing of the Secure Act, persons/entities that fall under either of these two classifications now only have 10 years to withdraw from an inherited IRA.

"I encourage you to speak with your advisor and
review some strategies to help you plan for this new law."

A surviving spouse or younger children (within a certain age range) are examples of eligible designated beneficiaries, to whom the stretch IRA still applies. They’re now the only ones who have their entire lifetime to withdraw from that IRA.

The passing of the Secure Act has had some significant consequences, so I encourage you to speak with your advisor and go over some strategies to help you plan for this new law.

One thing that we plan to do for all our clients come September is to conduct a beneficiary designation review to make sure that your IRA beneficiaries are designated properly. If they aren’t, it can cause all sorts of legal and tax problems. A simple beneficiary designation review can help solve several problems.

If you have any questions or need someone to speak to about your beneficiary designations, please reach out to us. We’ll be happy to discuss it with you.

The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.