Naming someone other than your spouse as the beneficiary for your IRA

Naming a beneficiary for your traditional IRA or employer-sponsored retirement plan may be one of the most important financial decisions you ever make. The beneficiary (or beneficiaries) you name will receive the funds remaining in your IRA or plan after you die, so consider your loved ones’ future needs. However, choosing the right beneficiary is often more complicated than that. If you’re married, your first thought may be to name your spouse as the primary beneficiary of your IRA or plan. Naming a spouse is very common and can make sense for several reasons. But whether you’re married or not, naming someone other than a spouse as your retirement account beneficiary may sometimes be a better choice. Children, grandchildren, other relatives, and close friends are popular beneficiary choices for IRA owners and plan participants. You should consider your options and seek professional advice to make the right choice.   Advantages of naming a child, grandchild, or other individual When you take a distribution from your traditional IRA or retirement plan, you generally have to pay federal (and probably state) income tax on all or a portion of it. For federal income tax, distributions are taxed at a certain rate according