What Is an Eligible Designated Beneficiary for a Retirement Plan?

The SECURE Act had significant and far reaching implications for the ability to distribute retirement plans over the course of a lifetime. Since this went into effect, lifetime distributions are still allowed but they apply only to one particular category of beneficiaries, those referred to as eligible designated beneficiaries.

EDBs include disabled individuals, surviving spouses, minor children, and individuals who are no more than 10 years younger than the retirement plan owner and chronically ill people. Grandchildren and adult children are not included in the definition of EDBs.

A designated beneficiary who fails to meet these eligibility grounds is subject to a new 10 year rule on retirement plans, meaning that the retirement plan accounts must be emptied in full by the 10th year after the original owner’s death. Naming your spouse as the primary beneficiary of each of your retirement accounts can help to avoid this problem.

You need to ensure that the proper beneficiary designation forms have been filed directly with the retirement plan manager. It is generally advisable to do this to ensure that you can maximize the distribution period of your retirement plan assets if you are a married individual. For further information about incorporating your retirement plans and other assets into your comprehensive estate planning, schedule a consultation with a trusted lawyer today.

Make an annual calendar reminder to look at all of your estate planning beneficiary forms and verify that you have listed the right primary and contingency beneficiary.

When you want to include your beneficiary forms with the rest of your estate planning documents, set up a consultation our estate planning law firm in Pasadena so we can can connect your comprehensive plan together.

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