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Death Distinctions Between 401(k)s and IRAs

Contributor Natalie Choate discusses the challenges--and limitations--for heirs when beneficiary designations aren't completed for retirement accounts.

If you're going to die without an estate plan, it's probably better for your heirs if your retirement money is in an IRA rather than a qualified retirement plan.

Frank and Bill, both unmarried, both die in 2019 at age 65. Each of them has $500,000 in a retirement plan account. Each has a simple will leaving his estate to his three adult children but never bothered to complete a beneficiary designation form for his retirement plan. Frank's retirement account is a 401(k) plan; Bill's is an IRA.

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