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Dispatches Estate Planning

How to Change Incorrect or Missing Beneficiary Designations

There are seven ways survivors can change incorrect or missing individual retirement account (IRA) beneficiary designations after someone has died, according to Morningstar.

by Anine Sus | October 2019

There are seven ways survivors can change incorrect or missing individual retirement account (IRA) beneficiary designations after someone has died, according to Morningstar. They are:

  1. Check the default beneficiary provision;
  2. Do a spousal rollover through an estate;
  3. Claim a spousal share of estate;
  4. Remove a beneficiary before the deadline to do so;
  5. Contest the documents;
  6. Reform the documents; and
  7. Disclaim as a beneficiary.

The first option is to check who the default beneficiary is for the retirement plan. Even if no one was chosen as a beneficiary, there is usually one chosen by default. This will likely be the surviving spouse, if there is one.

The second option is for the surviving spouse to rollover the savings into their own IRA. This only works if the spouse is the sole or residuary beneficiary on the plan.

The third option, available in some states, is for the spouse to claim part of the savings and if they are so entitled, choose “which assets will be used to fund” their share.

The fourth option is to remove a beneficiary by September 30 of the year after the spouse has died. To do so, Morningstar recommends paying off a beneficiary before the “beneficiary finalization date” (September 30).

The fifth option is to contest the existing documents. If the wrong beneficiary has been designated, contesting the will or related documents can bring about the correct beneficiary.

The sixth option is to reform the existing documents. For this to work, there has to be a clear reason such as undue influence. The IRS “has stated that it will not recognize post-death reformations for minimum distribution purposes.”

The seventh option is for a beneficiary to “disclaim” their status. If the beneficiary agrees to comply with all of the rules, this will pass the benefits to the next beneficiary in line.

Source: “7 Ways to Fix Wrong or Missing Beneficiary Designations,” by Natalie Choate; Morningstar, August 7, 2019.

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