Please note that Portnoff Financial has joined with Tempus Wealth Planning and some information here may no longer be applicable. Please contact Jeremy Portnoff at 949-226-8342 (CA) or 732-226-3113 (NJ) for additional information.  We apologize for any confusion while we are in transition. 

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Planning For Multiple Beneficiaries in 5 Easy Steps

For some people, leaving a legacy is as simple as naming their spouse as their sole beneficiary, but for many, there is a list of loved ones they want to include. Beneficiary planning can be tricky, and if you’re planning to leave your assets to more than one person, you need to ensure that you’re setting everything up correctly.

When do multiple beneficiaries exist? 
Multiple beneficiaries exist when an individual names more than one beneficiary for their IRA.

When should you name more than one beneficiary? 
When you want your IRA assets to go to more than one person or entity without having to incur additional fees or paperwork by maintaining separate accounts for each beneficiary.


Here are 5 steps you can use to plan for multiple beneficiaries: 

1. Due date for designated beneficiaries. September 30 of the year following the year of the IRA owner’s death is the date designated beneficiaries are determined for purposes of post-death stretch payments. 

2. Due date for non-designated beneficiaries. These beneficiaries should be cashed-out before the September 30 date mentioned above. These beneficiaries include charities, estates and non-qualifying trusts since they have no measurable life expectancies. If they are not cashed out in time, they could prevent other beneficiaries from being able to stretch out distributions.

3. Due date for separate inherited IRAs. These should be established and funded for each designated beneficiary by December 31 of the year following the year of the account owner’s death. These accounts must retain the decedent’s name as part of their title and include language identifying them as “inherited” or “beneficiary” accounts, but they must use the beneficiary’s social security number for reporting purposes.

4. Maximize the stretch. Each designated beneficiary identified by September 30 can utilize his or her own single life expectancy to maximize the stretch IRA if a separate account is established and funded by December 31. The single life expectancy factor is determined in the year following the year of the account owner’s death. Going forward, the factor is simply reduced by one each year (unless the sole beneficiary is the spouse, in which case he/she re-determines his/her life expectancy each year).

5. What if you don’t split the account in time? The single life expectancy of the oldest beneficiary must be used to calculate payments to all beneficiaries if separate inherited accounts are not established in time.


Still have questions or need help with your unique situation? Click here to contact us and schedule your Free Introductory Call so that we can assess your situation and help you make the best decision for you and your loved ones. 


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