Volume 15: The Lockshield Letter
Jan 2, 2026
Episode 10: Beneficiary IRAs
Beneficiary IRAs: What You Need to Know
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Episode Description
In this episode, we’re breaking down Beneficiary IRAs and what really happens to retirement accounts after someone passes away. A beneficiary is simply the person designated to receive assets upon someone’s death, with primary beneficiaries first in line and contingent (or secondary) beneficiaries stepping in if the primary is no longer living.
We explain the difference between pro rata and per stirpes designations — where pro rata splits assets evenly among living primary beneficiaries, and per stirpes allows a deceased beneficiary’s share to pass down to their descendants. We cover that a named beneficiary on an account overrides a will, since a will is designed to direct assets that don’t already have instructions attached.
We also walk through the key differences between spouse and non-spouse beneficiaries: a spouse can treat an inherited IRA as their own, while most non-spouse beneficiaries today must withdraw the funds within ten years under current rules. If the account owner passed away before 2020, however, older “stretch IRA” rules may apply, allowing distributions to be spread out over a longer period at lower required percentages. Understanding how beneficiary designations work can make a significant difference in how efficiently assets transfer and how much tax is ultimately paid.
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