IRAs let you determine what happens to your money upon your death. The money goes to the designated beneficiary and continues to grow tax-deferred in an inherited IRA. In most cases, your beneficiaries can stretch out required distributions and delay payment of taxes on those distributions.
Below are the most commonly asked questions about naming beneficiaries:
Naming a primary beneficiary lets your assets go to whomever you choose. If you don't designate primary beneficiaries, your assets will pass to the default beneficiaries named under Vanguard's Custodial Account Agreement. The default beneficiary is your surviving spouse if you're married or your estate if you're not. If your assets pass to your estate, distribution of your assets may be delayed and may result in higher taxes for your beneficiaries.
Secondary beneficiaries receive the assets if your primary beneficiaries die before you or refuse to take the inheritance. If no secondary beneficiaries are named, your assets may pass to your estate—subjecting them to the probate process, estate expenses and creditor claims.
The table below shows the types of beneficiaries you can choose for your Vanguard retirement accounts. They can be assigned by name or for some, by relationship.
|Beneficiary type||Assign by name||Assign by relationship|
The table below shows the types of entities you can choose for your Vanguard retirement account beneficiaries.
|Other beneficiary types|
|Charities and organizations||
It's a good idea to keep your beneficiary and account information with other legal papers. Upon your death, your beneficiaries or the person handling your estate should call Vanguard and speak with a specialist for instructions and help with paperwork and documentation. We will not contact your beneficiaries.
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