Do You Remember What You Wrote on Your IRA Application?

By Elsie Dudukovich1 Comments

When it comes to investing and taxes, there is no shortage of information on investment techniques, and the consequences if mistakes are made.  Education of this nature is vital for everyone – especially self-directed IRA owners who are directly responsible for the growth and direction of their retirement funds.  Who wouldn’t want to avoid a costly pitfall?

Sometimes our miscalculations and slip-ups don’t affect us; they affect the ones we love.  When it comes to your account’s beneficiaries, this is certainly the case.  Missing, incorrect, incomplete, or out of date beneficiary information can be costly and a source of unnecessary grief for your loved ones.  
  • Beneficiary information supersedes the directives in your will when it comes to how the assets of your IRA accounts are handled.  This important detail can have many impacts.  Neglecting to update your beneficiary information after a divorce could mean your ex-spouse receives those assets if they are still listed on the account.    
  • Leaving the beneficiary section blank or naming your estate as the beneficiary – instead of a person – also has its own impact on your loved ones.  Failing to name a beneficiary could have those assets being considered part of your estate and subject to any claims by creditors.  Incorrect or incomplete beneficiary information could also lead to your assets being tied up in probate, a potentially lengthy process, instead of being available to your loved ones.
  • If your IRA beneficiary information is correct and complete, make sure this information is easy for your loved ones to locate when the times comes.  Your will, deeds, and other vital documents, won’t be helpful to your heirs if they are unable to locate these items – or know they exist.  
  • Consider setting up an annual schedule to review your beneficiary information on your IRAs and other accounts.  Make sure you include changing beneficiary forms when updating other documents after an important life event.