Designated Beneficiary

Definition

A designated beneficiary is a beneficiary whose life expectancy is eligible to be used to calculate required minimum distributions (RMD) for a qualified plan, 403(b) account, 457(b) plan or IRA. The designated beneficiary can be the person who the retirement account owner identifies on the beneficiary form to inherit the retirement account balance, or the person who is the beneficiary by default.

Referring Cite

IRC §401(a)(9)(E), Treas. Reg. §1.401(a)(9)-4, Q&A-1

Additional Helpful Information

The designated beneficiary, for purposes of determining whose life expectancy is used to calculated post-death RMDs is determined by September 30 of the year following the year the retirement account owner dies. Treas. Reg. §1.401(a)(9)-4, Q&A 4(a)-(c)

An individual can still be a designated beneficiary, even if the person was not named on the beneficiary form, providing the person can be identified as the beneficiary. Treas. Reg. §1.401(a)(9)-4, Q&A-1].  For instance, assume that  an individual did not name a beneficiary on the beneficiary form, but the default provisions of the plan document or IRA agreement says something to the effect of “…if no beneficiary is named, the designated beneficiary will be the spouse…:, then in such cases, the spouse will be the designated beneficiary, and have the same rights that he/she would have, had he/she been named as the beneficiary on the beneficiary form,

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