By: John P. Napolitano, CFP®, CPA, PFS, MST

Most savers don’t think twice about the beneficiaries that they name for their retirement accounts.  Retirement proceeds are, more often than not, left outright to a spouse and then to any children divided equally. Once in the hands of the beneficiary recipient, there are options on what may be best.

The first thought is to make sure that your loved one has a beneficiary election.  Not having a proper designated beneficiary can cause the IRA to be paid out to the estate.  Doing this would subject the proceeds to income taxation much sooner than otherwise necessary.

There are different rules for spouse beneficiaries and non-spouse beneficiaries.  Spouse beneficiaries can choose to roll their deceased spouses into an IRA of their own.  From there they can name their own beneficiaries, take distributions based on their own life expectancy, convert to a Roth IRA or anything that you could do if you were the original owner of the account.

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John P. Napolitano CFP®, CPA is CEO of U. S. Wealth Management in Braintree, MA.  Visit JohnPNapolitano on LinkedIn. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.