IRA Beneficiary
10. New Beneficiary Rules
You can change your beneficiary at any time while you are living. After you die, the distributions will be paid over that beneficiary's life expectancy.
For example, let's say you named your spouse as beneficiary and your spouse died soon after you started taking distributions from your account. You name your grandson as the new beneficiary. After you die, the distributions will be paid over your grandson's life expectancy, which will give you many more years of tax-deferred growth on this money.*
It is very important to name both primary and contingent beneficiaries now while you are living to allow for greater flexibility and "clean up" later, after your death. For example, your surviving spouse could disclaim (or refuse) some benefits so a grandchild could inherit. No new beneficiaries can be added after you die (unless your spouse does a rollover, which we'll discuss shortly), so make sure you have all appropriate beneficiaries included.
Just how important can long-term tax-deferred growth be? Let's take a look and see.
*NOTE: Under the old rules, you could name your grandson as the new beneficiary, but the distributions would still be paid over your deceased spouse's life expectancy.