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RETIREMENT PLANNING
What Happens to Investment Accounts when you Die?
written by Mike Ballew September 24, 2023
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Ever wonder what happens to investment accounts when you die? We have all the answers.

Beneficiary Designation

Every time you open a new bank or investment account, you’re asked to designate a beneficiary. The beneficiary is the one who will inherit the funds in the event of your death. You can designate more than one beneficiary and assign a percentage to each.

It's important to keep your accounts up to date. Every time you experience a major life change such as a marriage or divorce, you need to update your account beneficiaries. This is also true if there is a death in your family and when your children turn 18.

Do you know who the beneficiary is on your accounts? When was the last time you checked?

Think about this: if you go through a divorce, would you want your ex to receive the money in your accounts in the event of your death? Probably not. Examine your accounts and make sure the proper beneficiary is designated.

Required Minimum Distributions

Required Minimum Distributions, or RMDs, are government-mandated withdrawals from pre-tax investment accounts. Once you reach 73 years of age, you are required to withdraw a minimum amount from your pre-tax retirement accounts each year.

Here’s a question: if RMDs are based on your age, what happens if you die? Are the RMDs based on your age or that of your beneficiary?

RMDs are based on the beneficiary’s age. Regardless of whether the deceased was under age 73 or over, RMDs on inherited accounts are based on the beneficiary’s age. For additional information, check out our article entitled How to Handle an Inherited IRA.

Conclusion

So there you have it! Now you know what happens to investment accounts when you die. If you want to learn more about retirement planning and personal finance, navigate to the Retirement Planning, Personal Finance, or Success Strategies page and scroll down. There you will find hundreds of articles for your reading pleasure.

Photo credit: Pixabay Eggstack News will never post an article influenced by an outside company or advertiser. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future.
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MIKE BALLEW
Eggstack founder, Financial Planning Association member, engineer, and software developer.