Beneficiary Type

Spouse Beneficiary: A spouse is an individual who is treated as the IRA owner's spouse under applicable state law on the date of the IRA owner's death.

Nonspouse Beneficiary: A nonspouse is any individual who is not a spouse.

Trust Beneficiary: For purposes of this tool, Trust Beneficiary includes any type of trust that is valid under state law.

Nonperson Beneficiary: A nonperson beneficiary includes the IRA owner’s estate, or an entity including (but not limited to) organizations such as a church, college/university, or other charitable organization. For purposes of this tool, a trust is not considered a nonperson beneficiary.

IRA Type

Traditional IRA: A Traditional IRA is an arrangement that allows an individual to save for retirement while at the same time receiving tax advantages. Contributions may be fully or partially deductible and/or eligible for a tax credit. As well, amounts grow tax deferred and are not taxed until distributed.

Roth IRA: A Roth IRA is an arrangement that allows an individual to save for retirement with the benefit of a possible tax credit at the time of contribution as well as the distribution of tax-free earnings if qualified distribution requirements are satisfied. While there is no tax deduction for Roth IRA contributions, the return of contributions from Roth IRAs is never taxed at the time of distribution.

SEP IRA: A SEP IRA is a Traditional IRA which receives contributions (generally employer contributions) under an employer SEP (simplified employee pension) plan. Amounts grow tax deferred and are not taxed until distributed.

SIMPLE IRA: A SIMPLE IRA is an IRA that receives contributions (i.e. salary deferrals and employer contributions) under an employer SIMPLE (savings incentive match plan for employees) plan. A SIMPLE IRA can only receive SIMPLE IRA contributions. Amounts grow tax deferred and are not taxed until distributed.

Nonspouse Beneficiary Criteria

Minor Child of Deceased IRA Owner: An individual is a “Minor Child of Deceased IRA Owner” if the individual is a child of the IRA owner and has not yet met the age of majority under applicable state law or is treated as having not reached the age of majority because the child has not completed a specified course of education and is under the age of 26.

Disabled (as defined in IRC Sec. 72(m)): An individual is “Disabled (as defined in IRC Sec. 72(m))” if the individual is not able to do any substantial gainful activity because of a physical or mental condition, and the condition can be expected to result in death or be of long, continued, and indefinite duration.

Chronically Ill (as defined in IRC Sec. 401(a)(9)(E)(ii)(IV)): An individual is “Chronically Ill (as defined in IRC Sec. 401(a)(9)(E)(ii)(IV))” if the individual has been certified by a licensed health care practitioner as (i) being unable to perform (without substantial assistance from another individual) at least 2 activities of daily living (i.e., eating, toileting, transferring, bathing, dressing and continence) for a period of at least 90 days and to be indefinite which is reasonably expected to by lengthy in duration, (ii) having a level of disability similar (as determined under regulations prescribed by the Secretary in consultation with the Secretary of Health and Human Services) to the level of disability described in clause (i), or (iii) requiring substantial supervision to protect such individual from threats to health and safety due to severe cognitive impairment. Such term shall not include any individual otherwise meeting the requirements of the preceding sentence unless within the preceding 12-month period a licensed health care practitioner has certified that such individual meets such requirements.