How An IRA Is Treated When A Beneficiary Dies

When an IRA owner dies while the IRA still has funds in it, the primary beneficiary(ies) have the opportunity to transfer the account to an inherited IRA and begin taking the Required Minimum Distributions (RMDs) over his or her lifetime. When this primary beneficiary dies, it can be difficult to figure out who the money goes to. This is known as the successor beneficiary.

It’s important to know the difference between a successor beneficiary and a contingent beneficiary. A contingent beneficiary takes the place of the primary beneficiary in the event that the primary beneficiary dies before the original owner does. A successor, on the other hand, takes the place of the primary beneficiary when the primary beneficiary outlives the original owner. So it’s a matter of timing. What we’re interested in is the successor beneficiary.

There are four main ways that a successor beneficiary is determined:

  • Successor is named by the primary beneficiary. When the inherited IRA is established, the primary beneficiary has the opportunity to name one or more beneficiaries of the inherited IRA, along with contingent beneficiaries if desired.
  • Successor is the primary beneficiary’s estate. If the primary beneficiary hasn’t designated a beneficiary of the inherited IRA, the primary beneficiary’s estate becomes the successor beneficiary of the IRA.
  • Custodial documents name a successor beneficiary. Some IRA custodians provide for the designation of a successor beneficiary in the original plan documents. This is relatively rare, and even more rare that a successor is actually named.
  • Original owner names a successor beneficiary. Sometimes the original owner has had the foresight to utilize a trust document of some variety to control succession among beneficiaries. In a case like this, the trust is the primary beneficiary, and the trust has a primary beneficiary and successor beneficiary(ies).

Distribution for the Successor Beneficiary

So, having sorted out that we are working with the appropriate successor beneficiary, we need to determine what is the proper distribution period for the successor beneficiary. As we know, if the IRA is an inherited IRA, it is subject to Required Minimum Distributions, over a period determined by the beneficiary’s age at the time of the death of the original owner. This figure is determined from Table I in the first year of distribution (the year after the death of the original owner), and is a set period of time. The factor from Table I is used in the first year, and each subsequent year one is subtracted from the first factor and the IRA is distributed based on that amount.

So, for example, if the beneficiary is 71 years of age in the first year of distribution, according to Table I the factor is 16.3. The IRA value is divided by 16.3 to come up with the RMD for the first year. Each subsequent year 1 is subtracted from the Table I factor, so that the IRA is distributed over 16.3 years. This is known as the Applicable Distribution Period, or ADP.

When a successor beneficiary takes over to receive distributions from the inherited IRA, the original ADP is still in effect, and the IRA must be distributed over that remaining period to the successor beneficiary(ies).


Several factors can add a considerable degree of complication to the process – such as if there are multiple primary beneficiaries and/or multiple successor beneficiaries.

Each primary beneficiary is treated separately, and the successors for each (unless determined by the original plan as mentioned above) are determined by the individual beneficiary. When there are multiple successors, each one is treated separately and the original ADP for the applicable primary beneficiary applies to all successors pro rata for the successor’s share.

Another complication is when one or more beneficiaries disclaims the inheritance. In a case like that, first it is determined whether the original beneficiary designation had pre-determined the successor for each primary beneficiary (such as “per stirpes”, meaning that the heirs of the original beneficiary are bequeathed the disclaimed share). In the absence of this sort of designation, the other beneficiaries in the primary class take over the disclaimed share.

Of course in the real world there are many, many more complications, but this should give you a place to start. Use the comments section below to bring in your more complex situations and we’ll work them out.

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

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  • Hi Jim,
    My father (who is now cognitively disabled and took at least one policy out after being diagnosed with dementia but that’s a different story…) named his sister as primary beneficiary on two annuity accounts. He did not name contingent beneficiaries. What happens in the event his sister passes before he does? Do the beneficiary designations automatically die with his sister and any proceeds revert to his estate or would they pass on to his sisters heirs? Thanks!

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  • My question regards the notification of death on an IRA acct. Our Aunt passed away March, 2017. There were 5 of us listed as beneficiaries . To date, the executor of her estate as not done anything with the IRA as far as submitting the death certificate so that we can transfer the funds into Inherited IRA accts. Our Aunt had not taken her RMD for the year either so we will need to take it. We are having trouble understanding the delay. References are being made about her will and settling her estate. Am I correct that those issues have nothing to do with the IRA? What is the normal time frame for transferring an IRA to the beneficiaries?

  • Jim….Mom passed away at age 62 and Dad was the beneficiary of Moms 401k. Dad passed away at 69 and listed me his son as the beneficiary of his inherited 401k. As the successor beneficiary am I correct to assume the my RMD will be based on my age and whose age will be used to determine when RMD begin? Thank you.

  • my uncle had a traditional ira and passed 2/2017. He listed the primary beneficiary as my father and a secondary beneficiary as his nephew (my brother). My father passed 5/2017 and had not done anything with the ira since we were still sorting through everything. Would the IRA go to my father’s estate as the primary beneficiary or to my brother who was listed as the secondary beneficiary?

      • Hi Jim,
        When you say that is the most likely outcome, do you mean the likely outcome you think would go to my father’s estate since he was the only listed primary beneficiary? or to my brother since he was listed as the secondary beneficiary?

        The company holding the IRA is saying they think it would go to my brother as the secondary beneficiary but they keep saying they are checking and can’t provide a definite answer or their reasoning behind it going to a secondary beneficiary instead of the primary beneficiary that outlived the original policy owner.

        We have a tax advisor and a financial advisor that are both stumped as well. They both would have assumed it would go to my father’s estate since he was the sole primary beneficiary and did outlive the policyholder by about 3 months.

        thank you!

  • My father had an IRA and he left his spouse as beneficiary and his children as contingent beneficiary’s. He died in July 2016 last year she died in April of 2017. Who gets the money?

  • I really appreciate all of the information you have available on the internet. I have a situation I am hoping you can help clarify. My uncle died and he did not have a beneficiary on his IRA. He was already taking RMD’s. The estate was deemed the beneficiary. Legally, I have been appointed the beneficiary of the estate. So, I am the successor beneficiary where the primary beneficiary was the estate. How would I calculate RMD’s?

    Thank you


    • I believe you are required to withdraw the total balance of the IRA within 5 years of the death of the original owner. Had you been named as a beneficiary of the account (on the account documents) you would have been able to stretch the IRA over your lifetime. Since this was not the case, your only option to delay withdrawals is the 5 year payout.

  • There are two primary non-spousal beneficiaries to an inherited IRA & only one beneficiary has come forth.
    The investment brokerage can not locate the other beneficiary. It has been 18 months since the account holder passed.
    How long does the other benefiary has to claim their portion.
    If they dont claim their portion, does it go to the other primary beneficiary?

  • My father just passed away this April and he had a IRA how long does it usually take to collect. We just had to mail in the death certificate and fill out a paper we had to get motorized. How long does it usually take to get the check?

  • My Mother had an IRA and my Dad was the beneficiary. She passed in September and he passed in December. As a spouse, he becomes the owner and has to taken his RMD based on her Age Table within a year, correct? But he died and his 3 children (me) now each have our own benificiary account under Dad. It was set up TOD under Dad’s. My question is…..are we only responsible for our RMD within a year or will we have to take some other one. Thank you.

    • You need to talk to the custodian of the IRA to get an understanding of the requirements. There may be two ways this could be handled: either you will have to take distribution of the entire account within 5 years, or you may be able to take Required Minimum Distributions over your lifetime(s). If the custodian doesn’t have any recommendation for you then you may need to get an attorney involved who can tell you how this must be handled in your situation.

  • My uncle died in 2012 at the age of 71. His brother, who was my dad, inherited both a Roth and a Traditional IRA with low 4 figures of balances. To my knowledge, no distributions ever occurred after my uncle’s death. Unfortunately, we found out in 2016 shortly after my dad died in the early part of that year, that my dad did not file taxes for the last few years. After he died, a sibling and I inherited my uncle’s IRA. Do we have to go back and figure out all my dad’s taxes from 2012-2016 before being able to determine the MRDs for the two of us?

    • If they’re low 4 figure balances, I’d suggest just distributing the entire balance and getting on with life. You could go back and try to figure out the RMDs and penalties for not taking them, but it will likely cause a lot of extra work and very little if anything gained for the effort.

    • My dad just passed and he hasn’t filed taxes from 2014,2015, 2016 and his cpa is getting that straightened out for us because he owes state taxes. She also needed the death certificate to go with his income tax. I don’t know if we will get anything back but at least his taxes will be filed and caught up.

  • HI Jim,

    Please advise what if your dad left his ira account to a trust account with three beneficiaries. Dad died age 76. When do the benefiaries get to start taking Minimum required distributions?

    Thank you

  • Jim,

    Mom (age 60) is the beneficiary of an Inherited IRA received from her father. She names her husband as the primary beneficiary and her children as contingent beneficiaries.

    Are there any differences in tax treatment if she instead designates her revocable trust as the contingent beneficiary of the Inherited IRA vs. naming her children directly. Her children are also the contingent beneficiaries of her trust.


    Bill P.

  • The plan participant was my mother, my brother and I were 50% beneficiaries. My brother died 2 years prior to my mom and I am beneficiary of her estate through letter of testamentary. I supplied both death certificates and letter of testamentary documents needed. Would I not be the beneficiary in this case? I am the executor of the estate?

    Thanks for your help. I live in California if that matters but the $ is in a bank in PA.

    Thank you again,

  • My brother and I were 50% beneficiaries in my mom’s IRA account. He passed away before she did and I am the sole survivor of the family. He died first so then I am the successor and will have the money transferred into a inherited IRA account is that correct. The bank is saying his portion needs to go into an estate of my brother’s name. Is this accurate?

  • My Father passed away on October 10th 2016. His current wife, my son and I are primary beneficiaries.

    We were in the process of returning forms to the Financial Services in charge last week when his wife died. The funds have not been dispersed. I expect, although I am not sure, that the forms concerning his wife’s new IRA had not been completed. She had dementia before she died and this probably complicates things.

    Would the funds designated to her as a primary beneficiary go to her estate or to me and my son?

    When I last spoke with the financial services a couple of days ago they said they are planning to disperse the funds to her estate.

    Seems pretty complicated to me. I look forward to having your take on this.

  • What if the original beneficiary is the spouse of the original owner and he/she chooses to treat the IRA as his/her own? Then when the original beneficiary passes away and has named a non-spousal beneficiary, is the original ADP still in effect or may the successor beneficiary use his/her own life expectancy to determine the RMD?

  • My father passed away Feb of 2015, leaving and IRA without a beneficiary listed, that my mother and I found out about because of the tax statement and his RMD. She was told to complete a form to put a claim in on this asset, as they were married at the time of his death. On the day we were going to head to the bank to give the signed documents to submit a claim, I was notified of my mother’s death. As Wisconsin is a community property state, all assets then automatically were left to my mother and we did not open an estate for my father. Now, the bank is stating that the IRA must be paid to my father’s estate (which doesn’t exist) instead of being claimed by my mother’s estate (of which I am the PR). What, if anything, are options so that an estate doesn’t have to be created for my father also.

  • My father died 9/6/14 at age 83. He took his 2014 RMD. I am the beneficiary of the IRAs (Roth and Traditional). Litigation ensued immediately upon my father’s death. The PR of my father’s estate refused to provide me with info regarding my father’s assets (I didn’t know where the IRAs were or if I was beneficiary). The PR had the Court freeze the IRAs. As of 10/19/16, no beneficiary designation has been made and RMDs have not been taken for 2015 or 2016. The financial institution holding the IRAs refuses to give me any info about the IRAs. The Court freeze forbids any funds from being disbursed from the IRAs. The PR of the estate has no right/power/authority over the IRAs pursuant to any documentation. Who owns the IRAs? How do we fix the looming IRS problems in that I want to take the “stretch-out” option. Title to the IRAs has not transferred.

    • Sounds like you will need to work within the estate probate system to straighten this out. Has the PR indicated why no information is being provided or what the timeline will be for providing information? Probably wouldn’t hurt to get an attorney on your side who can speak with the attorney on the other side to gather information for you.

  • What happens if the primary beneficiary inherits an Ira but dies before they claimed the Ira? Does it go to the secondary beneficiary or to the primary’s estate?

  • Nice article. What happens if the primary beneficiary dies? The owner of the IRA outlived the benficiary but did not change the benificiary. Does it go to the spouse or the estate?

  • If the named beneficiary of an IRA dies before the owner of the IRA does the IRA go back to the owners estate or the deceased beneficiary’s estate?
    And can the IRA be received by a lump sum distribution?

    • I believe if the original owner has not designated a successor or secondary beneficiary, the IRA would go to the original owner’s estate. With no other beneficiary designations, the IRA would have to be paid out to the estate within 5 years of the death of the original owner.

  • I have a client who is the IRA owner of an inherited IRA. She inherited the IRA from her father who died at age 80. She is currently receiving payments over her lifetime. I understand that it is a matter of state law if she can name beneficiaries of this inherited IRA – we are located in Indiana and I cannot find anything in Indiana law that allows or does not allow her to name beneficiaries.

    Can you point me in the right direction?

  • JIM, If the successor beneficiary dies (survived by his wife) before naming a beneficiary and his estate becomes owner, does this eliminate the stretch option for his widow ? A quick reply is appreciated.

    • I believe the wife of the successor beneficiary would simply continue the RMDs as if they were being paid out based on the life of the original beneficiary. In other words, this successor to the successor just assumes the role of the first successor.

      You’ll probably want to get a legal opinion on this, the foregoing is an educated guess, and state law may affect the actual outcome.

  • Wanted to get your take on this situation.

    My father passed away Feb. 28, 2015
    My sister passed away June 29,2015.
    There are three children.

    We three children are beneficiaries of my dads IRA.

    My sister who passed had assigned me and my other sister as her beneficiaries to avoid going through her estate. My mother left my father for another man and my father and my sister do not want her to get any of that money, that is why my sister assigned myself and other sister as beneficiaries.

    Our attorney and financial planner are saying that since my sister’s inherited IRA hasn’t “funded” yet, that it will most likely have to go through her estate. We are not sure what has taken so long, that is a question for the financial planner.

    We do not want this to go through her estate.

    Any thoughts?

    Thanks in advance.

  • Great article Jim. How many subsequent generations can the IRA be stretched? i.e. does the successor beneficiary have an opportunity to name a beneficiary and pass along the assets accordingly?

    My other question is what if the beneficiary inherits an IRA where the owner wasn’t yet required to take RMDs?

    • This depends on several things. First of all, if there was a contingent beneficiary named in the plan documents, if the primary beneficiary pre-deceases the plan participant, the contingent beneficiary would receive the proceeds of the plan.

      If there is no contingent beneficiary and the primary beneficiary pre-deceases the plan participant, the plan documents (i.e., the “fine print”) should define who is the default beneficiary. This could be very vague, such as “all living heirs”. Or, the plan documents may not name a default beneficiary, in which case the estate of the plan participant would be the default by testate law.

      If the primary beneficiary is one of several primary beneficiaries named, it can be even more complicated, and you’ll want to enlist an estate attorney to help sort things out.

      Hope this helps –


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