Upon establishment of a NYCE IRA, the account owner has the opportunity to choose both primary beneficiaries and contingent beneficiaries (See: Establishing a NYCE IRA). In order to change your primary or contingent beneficiary, you must a) sign in to your account and make the desired change, or b) submit a NYCE IRA Personal Information Change Request Form. Forms should be submitted to the NYCE IRA’s Administrative Office. The change will replace the last beneficiary election you filed with the NYCE IRA, so long as the requested change is received by the NYCE IRA’s Administrative Office prior to your death. You will receive a confirmation letter in the mail indicating your requested change.
Upon the death of the IRA owner, any amount payable from the NYCE IRA shall be paid only to the primary beneficiary(ies) who survive the IRA owner. If any of the primary beneficiaries predecease the IRA owner, their share will be distributed proportionately among the remaining primary beneficiaries. Only if all the primary beneficiaries predecease the participant will the contingent beneficiary(ies) be entitled to any amount of the NYCE IRA. If any of the contingent beneficiaries predecease the participant their share will be distributed proportionately among the remaining contingent beneficiaries. If no beneficiary designation is in effect at the time of the participant’s death, or if no primary or contingent beneficiary survives the IRA owner, the NYCE IRA will be paid to the owner’s surviving spouse, or, if there is no surviving spouse, to the IRA owner’s estate.
When a beneficiary inherits a NYCE IRA from the owner, the beneficiary is eligible to choose his own primary and contingent beneficiaries. Upon the death of the initial beneficiary, if any assets remain in the NYCE IRA, the successor beneficiary(s) shall be paid in accordance with the order established for NYCE IRA owners.
If you are a spousal beneficiary, you have the option of establishing a NYCE IRA beneficiary account from assets inherited from your spouse. With an inherited traditional NYCE IRA, the amount of your Required Minimum Distributions will be based on your age and be recalculated each year based on the factors in the Single Life Expectancy Table. The timing of the initial distribution may be based on your spouse’s age at the time of his/her death; if your spouse was:
Older than age 70½, you must begin taking Required Minimum Distributions by December 31st of the year following your spouse’s death. If you are younger than 70½, you can delay Required Minimum Distributions until your spouse would have turned 70½.
When you inherit your spouse’s NYCE IRA directly, you also have the option to roll over your inherited NYCE IRA proceeds into your own new or existing IRA and treat these assets as if they were your own. With this option, both the amount and the timing of required distributions are based on your own age. If you roll these assets into your own IRA, your Required Minimum Distribution (defined in Withdraws from the NYCE IRA) will generally be based on the Uniform Lifetime Table.
If you already have a NYCE Spousal IRA account, you can consolidate your inherited NYCE IRA proceeds into your existing account.
If you are a non-spousal beneficiary of a NYCE IRA account, you’ll control both how your inherited assets are invested and to whom they pass upon your death. Your Required Minimum Distributions will also generally be based on your own life expectancy.
If you’re sharing inherited NYCE IRA assets with other beneficiaries, you should set up your own separate account for your portion of the inherited NYCE IRA assets by December 31st of the year following the NYCE IRA owner’s date of death. Any beneficiaries who do not separate their inherited IRA assets by the cut-off date may be required to base their Required Minimum Distributions on the age of the oldest beneficiary on the account. See your tax or legal advisor with regard to your situation.
If you find that you will not need all or some of your inherited NYCE IRA assets during your lifetime, you may want to disclaim - or refuse to inherit all or part of - your NYCE IRA assets. Your disclaimed inheritance would then be passed on directly to the next eligible beneficiaries (originally selected by the IRA owner). Any required distributions would be based on the other beneficiary’s age, rather than your own. If the other beneficiaries are younger than you, you would, in effect, be “stretching out” the potential for tax deferred growth on this IRA legacy. For example, if your spouse named you as the primary beneficiary of his IRA, and your son as the contingent beneficiary, if you disclaim your IRA inheritance (meeting all the necessary requirements), your son would inherit all of the IRA assets. Since the required distributions would now be based on his life expectancy, the Required Minimum Distribution amount would be lower, leaving more assets in the account to potentially compound tax-deferred.
Note: Be sure to consult with a tax or legal advisor concerning this option.