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      What Do IRA Accountholders Need to Know About Beneficiary Designations?

      Overview common questions about beneficiaries and your STRATA IRA

      Rest assured STRATA's process in the event of a beneficiary claim includes a dedicated Beneficiary Concierge team to guarantee the IRA account is passed with care from a decedent to the beneficiary(ies).

      Explore common questions about beneficiaries and your STRATA IRA, including best practices and resources to make certain that, in the event of a beneficiary claim, the IRA account is able to be transitioned as seamlessly as possible. 

      Beneficiary Assignment 

      1. Q: How often should I update a beneficiary's contact information?

      A: It is important to keep your beneficiary's contact information current. If the beneficiary contact information is not accurate and STRATA is unable to make contact within a certain time period (which varies by state), the assets are escheated (transferred) to the IRA owner's state of residence. You may make updates using STRATA’s IRA Beneficiary Designation form. 


      2. Q: What happens if the account owner gets a divorce?

      A: A divorce does not automatically remove the designation of the spouse. The account owner must change his/her beneficiary election on our IRA Beneficiary Designation form.
       

      3. Q: Can an executor or a last will and testament overturn a beneficiary designation?

      A: No, an executor or last will and testament cannot overturn a beneficiary designation, unless ordered by a court. In such a case, the court order must be submitted for STRATA to review. 


      4. Q: Can I have a minor as a beneficiary?

      A: Yes, a minor beneficiary must have an inherited IRA opened. When the minor reaches age 21, they must complete an account application designating their own beneficiaries. Upon turning 21, distributions must be made based on the 10-year rule. For more information, refer to STRATA's Distribution Options: IRA Guidelines below. 


      5. Q: What requirements need to be met for a Qualified Trust as beneficiary? 

      A:

        • The trust must be valid under state law;
        • The trust must be irrevocable;
        • The trust must have identifiable beneficiaries; and
        • The trustee must furnish the IRA with a copy of the trust instrument or qualified trust document by October 31 of the year following the IRA account owner's passing.

      6. Q: What happens if the decedent does not have a beneficiary designated on the IRA account?

      A: If an IRA is left without a designated beneficiary, the IRA assets shall be paid to the descendant’s legal spouse. If there is no spouse, then the estate becomes the inheritor. 

      Asset Distribution


      7. Q: What if my assets are illiquid or non-divisible?

      A: Assets such as precious metals, real estate, or certain types of private and public investments can be difficult if there is more than one beneficiary and the division requirements are not clearly laid out. Beneficiaries will not have immediate access to funds and they should not be counted on to manage immediate expenses. Multiple beneficiaries can expect extended times to settle an account if:  

          • Liquidation is needed in order to make funds available. Assets may take time to sell and the distribution can only be completed once funds are available.
          • Beneficiaries are wanting to claim non-divisible assets, such as a unique piece of property or specific precious metals. This can be challenging to divide equally (or according to the designation terms) and other adjustments may be needed in order to fulfill the terms of the beneficiary designation. 

      Quick Reference Guide

      Download STRATA's Distribution Options: IRA Guidelines  to overview beneficiary distribution options, key terms, and more.

      Questions

      For questions regarding tax implications or advice on what makes sense for your circumstances, connect with your tax, legal, or financial professional. For information regarding a STRATA IRA account or to make a beneficiary claim, reach out to STRATA's Beneficiary Concierge team at 866-891-8264 and review What Do IRA Beneficiaries Need to Know? (link once article is published).