Naming Your Spouse to Inherit Retirement Accounts

Learn about the benefits of leaving a retirement account to your spouse, and how to name an alternate beneficiary or joint beneficiary.

By , J.D. UC Berkeley School of Law
Updated by Jennie Lin, Attorney Harvard Law School
Updated 11/21/2024

When you create an IRA or enroll in a 401(k) plan, the forms you fill out will ask you to name a beneficiary. You will probably also be given the opportunity to name an alternate (sometimes called a "secondary" or "contingent") beneficiary, who will inherit the money if your first choice dies before you do.

Most married couples name each other as beneficiaries—a good choice, because a surviving spouse who is the sole beneficiary has more flexibility about what to do with the money than do other beneficiaries. (See How the SECURE Act Affects Your Retirement and Estate Plans.) Read on to learn why beneficiaries who are surviving spouses have more options.

A Surviving Spouse's Options When Inheriting an IRA or 401(k)

A surviving spouse who is the sole beneficiary of a retirement account has two options: rolling over the account or leaving it as it is, as an "inherited IRA."

Roll Over the Account to the Surviving Spouse's Name

Spouses who are the sole beneficiaries of an IRA or qualified plan such as a 401(k) can roll over the money into their own retirement account. To do that, the spouse needs to contact the retirement account administrator and complete some paperwork.

Once the account has been rolled over, everything is just as if the surviving spouse were the original owner. The surviving spouse can now name their own beneficiary to inherit the funds. Required minimum distributions (RMDs) will begin when the spouse reaches age 73, and the amount of the RMDs will be based on the surviving spouse's life expectancy, as set out in IRS tables. (If the spouse remarries, required withdrawals will be based on the joint life expectancy of the survivor and the new spouse, if the new spouse is more than ten years younger.)

The surviving spouse doesn't have to pay income tax on money in the account, only on the money that is withdrawn. Meanwhile, the funds in the account can keep earning tax-deferred income.

The survivor can also roll an IRA or 401(k) into his or her own Roth IRA. Taxes will be due on the entire amount that is rolled over, however, so this would make financial sense only if the survivor expects to pay higher taxes later.

Leave the Account in the Deceased Spouse's Name

A spouse can also leave the inherited retirement account in the deceased spouse's name as an "inherited IRA." Before the SECURE 2.0 Act, the survivor had to begin taking RMDs based on the deceased spouse's age. This might have been disadvantageous if the surviving spouse was younger than the deceased spouse and wanted to leave the money in the account for as long as possible.

    But the SECURE 2.0 Act allows for more flexibility beginning in 2024: the surviving spouse has the option to take RMDs based on their own age. (Moreover, the age at which RMDs are required has been increased to 73, and will further increase to 75 by 2033).

    A surviving spouse might also choose to leave the account in the deceased spouse's name if:

    • the surviving spouse is younger than age 59½
    • the deceased spouse was older than age 59½, and
    • the surviving spouse wants to withdraw money soon.

    Why? There's a 10% early withdrawal penalty for taking money out of a retirement account before the age of 59½.

    Choosing an Alternate Beneficiary

    When you name your spouse as primary beneficiary, you should be able to name an alternate (or secondary or contingent) beneficiary—someone to inherit the money in case your spouse doesn't survive you. Many people name their children as the alternates.

    Be sure to enter an alternate's name—if you don't, the money will likely pass through probate.

    Naming an alternate beneficiary gives your family more flexibility after your death. It's easy for a beneficiary to "disclaim" an inheritance—that is, to turn it down in favor of an alternate beneficiary. A surviving spouse who doesn't need the money could let it go to the children instead, possibly allowing withdrawals to be spread out over a longer period.

    Can You Name Your Spouse and Another Beneficiary?

    It's generally a bad idea to name more than one beneficiary, for two reasons.

    First, if you name your spouse and someone else as beneficiaries, your spouse loses the special benefits and flexibility they would otherwise have.

    Second, it complicates things. Many non-spouse beneficiaries are subject to a ten-year rule imposed by the SECURE Act. If, for example, you named your spouse and ten-year-old grandson as your beneficiaries, they would be subject to different withdrawal rules.

    If you want to name multiple beneficiaries, the best practice is usually to split the inherited account into separate accounts, each owned by one of the beneficiaries, but not every retirement plan administrator allows this, and it creates complexities.

    Can You Control Who Gets the Remaining Funds After the First Beneficiary Dies?

    Sometimes spouses in a second marriage want to name their new spouse as a beneficiary but then have the remainder of the money go to their own kids after their spouse dies. But you can't do this when you name a beneficiary for your retirement plan.

    When you name your spouse as beneficiary of your retirement plan, the plan will belong to your spouse permanently when they die. And they can do whatever they want with it, including naming their own children as beneficiaries to what's left in the account. You can emphasize to your spouse that you want the remainder to go to your children, but your spouse isn't bound by your wishes.

    To have the remainder of your 401(k) go to your children after your spouse's death—assuming you die first—you'd have to do something a little more complex, such as name a trust as beneficiary of your 401(k). The trust would specify that while your husband is alive, he could have access to the income and perhaps some of the principal of the assets of the trust, but after your husband's death, the remainder would go to your child.

    Whenever money is taken out of the retirement plan, the money would go into the trust and then be distributed to beneficiaries as dictated by the terms of the trust.

    But there are disadvantages to naming a trust as beneficiary of your 401(k). You might want to sit down with an expert, such as an estate planning attorney who is also familiar with retirement plan rules, and sort out all the pros and cons before making a final decision.

    Do You Have to Name Your Spouse as a Beneficiary?

    If you want to name someone other than your spouse as beneficiary, make sure you don't run afoul of state and federal laws designed to protect surviving spouses. If your spouse survives you, but isn't named as a beneficiary of your retirement account, your spouse might still have a legal claim to the account.

    For example, with a 401(k), your spouse is automatically the beneficiary of the account, even if someone else is named, unless your spouse signs a waiver. With IRAs, whether your spouse is entitled to inherit part of the account depends upon your state. (For more on your spouse and ex-spouse's claims to retirement accounts, see our article on leaving your retirement account to someone other than your spouse.)

    Further Reading
    If You Don't Want to Leave Retirement Accounts to Your Spouse
    Estate Planning: IRAs and 401(k) Accounts
    Required Minimum Distributions (RMDs) From Retirement Accounts
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