When Not to Name Your Spouse the Beneficiary of Your IRA

Have your decided to make your spouse as the beneficiaries of your IRA. I do feel that if you have done it blindly then you might be proved wrong very soon. In many cases however naming your spouse as the beneficiary of the IRA really make lot of sense. However depending on your wishes you can have alternative as well to solve your cause.

At first I would like to look at the advantages which you will enjoy by naming the spouse as the beneficiary of the IRA.

The first advantage which the spouse really fins is that she can think the IRA to be her own. When the objective is to delay the required minimum distribution (RMD) for long as possible then the spouse will probably look for this alternative. This selection allows the spouse to postpone the RMD unless and until she is 70 to 72 years of age.

However you must know that what is the required minimum distribution or the RMD. And you must also know that what is the reasons behind the fact that most of the spouse prefers to postpone it for such a long period. I must tell you that as far as the RMD is concerned it is really the amount which the IRA owner will have to start distributing from his/her IRA. If the spouse is younger than the IRA owner then this idea really makes the sense.

Using the life expectancy of the spouse it is quiet good to name her the beneficiary and this really makes sense if the IRA owner is older than her. Given the fact that the IRA owner is older it basically reduces the distribution period. If the IRA owner dies before the age of 70/72 the spouse can defer the RMD until the IRA owner reaches the age of 70/72.

Despite these advantages and referrals some other beneficiaries may make sense.

Marital deduction trust

The use of a trust has many advantages such as the ability to customize the distribution of the trust assets among the beneficiaries, tax advantages and the ability to sprinkle income.

One main advantages of naming a marital trust as the beneficiaries of your IRA is to include a QTP provisions (qualified terminal interest properties). This allows the IRA owner to control where the property passes upon the death of the spouse. The most obvious use of the QTIP election id to make sure the children or a person are not disserted due to the spouse's own subsequent beneficiary election or he second marriage.

Keeping all these things in mind I do feel that you should really think twice before making anybody the beneficiary of your IRA. But you must have got an idea that the selection of spouse is really a safe option on most of the occasion than not.