Can You Change the Beneficiaries of an IRA Account?

You are entitled to change the beneficiaries of your Individual Retirement Account (IRA) and should do so when necessary. Ensuring that your IRA benefits the right people is a crucial component of estate planning, particularly if your IRA is one of your largest assets. Plan correctly and your heirs can take advantage of tax-sheltered investment assets for years, if not decades, after your death.


IRAs are what lawyers call a "non-probate asset," meaning that they can pass directly to your designated beneficiary or beneficiaries and skip probate court. To name one or more beneficiaries, you must file paperwork directly with your IRA's trustee -- the bank, agent or financial institution that manages your account. If you fail to do so or if your designated beneficiaries are themselves deceased, the IRA passes to your estate, where it will be subject to probate.

Out-of-date Beneficiary Forms

Failing to update your beneficiary forms can have unintended consequences. For example, many people wind up leaving their IRA to an ex-spouse because they did not change their forms after divorce. Or owners will name beneficiaries who predecease them, in which case the IRA automatically passes to the estate. IRAs that pass to estates must be emptied within five years. They are also subject to creditor claims in probate court.

Contingent Beneficiaries

In addition to naming primary beneficiaries, you can also name contingent beneficiaries to inherit your IRA if your primary beneficiaries should die unexpectedly. This also gives your primary beneficiaries the option of disclaiming the inheritance. For example, if you make your daughter your primary beneficiary and her son your contingent beneficiary, your daughter could disclaim the account and allow it to pass to your grandson.

Updating Your Forms

You should make it a point to review your IRA beneficiary forms throughout your life and update them as often as necessary. If you work with a CPA, tax season can be a convenient reminder to review the paperwork; and because the forms are complicated, a CPA's guidance can be helpful. Updating annually allows you to change your beneficiary forms to reflect life events, including marriage, divorce, the birth of a grandchild or the death of a beneficiary.