By Ian Berger, JD
IRA Analyst


Hello, I have an IRA from my deceased father. The beneficiary is my mother, but she passed on before my father. The IRA custodian is saying this doesn’t go through the estate but directly to me. I thought all IRA’s that don’t have a living beneficiary go through the estate.

Can you help me understand this?


Sorry about your loss.

If your father chose a contingent beneficiary (to receive the funds in case your mother died before he did), then his IRA would go to that contingent beneficiary. If your father did not pick a contingent beneficiary, then the terms of the IRA custodial agreement will dictate who inherits the IRA by default.

Every custodial agreement is different. Some default to a surviving spouse and, if there is no surviving spouse, then to the child (or children). That sounds like what your father’s custodial agreement says. Other agreements default to the estate.

You (or a financial advisor) should check the custodial agreement to make sure the custodian has given you the correct answer.

If you are not planning to spend the IRA funds right away, you may be better off tax-wise having the funds go directly to you. This is because the custodial agreement may allow you to stretch payments over your life expectancy. That’s something else for you (or an advisor) to check.


Can an ex-spouse who gains ownership of a participant’s 401(k) account through a QDRO award make use of NUA treatment on employer stock in the account, assuming the distribution of the awarded account occurs after the ex-spouse reaches age 59-1/2?  In other words, is the NUA treatment specific to the stock, rather than to the original participant who may have purchased the stock during his career?




Hi Doug,

Good question. An ex-spouse who has been awarded part of a 401(k) participant’s account through a QDRO can use the NUA tax break as long as the NUA rules are satisfied.

The ex-spouse must wait to take a distribution until the participant (not the ex-spouse) reaches age 59 ½, separates from service or dies. Once that happens, the ex-spouse must take a distribution of her entire account all in one calendar year. That year can be the year of the triggering event or a subsequent year.

If those rules are met, the ex-spouse can take a distribution and use NUA even if the participant does not take a distribution at the same time.