Are banks legally required to give account holders written statements of their beneficiaries upon request? I want to make it easier for my heirs, but I'm having trouble getting this information in writing.

No law requires a bank to provide copies of your account beneficiary designation forms. But you shouldn't stay at a bank that won't do it. Move your money to a more cooperative bank.

Accounts with named beneficiaries are governed by what their beneficiary forms say, not by your will — and a missing form can be costly, says Ed Slott, a Rockville Centre tax accountant.

For example, let's say you want your $400,000 Individual Retirement Account to go to your 40-year-old daughter. If she's named on the beneficiary form, under current law she can stretch IRA withdrawals over her addiitional 43.6-year life expectancy, while the IRA balance grows untaxed. If she takes only required minimum withdrawals, by the time she's 65, the IRA could be worth more than $1 million. But if the beneficiary form is missing, the default beneficiary may be your estate, which has no life expectancy. The result: the IRA must be emptied much faster. Even if your daughter inherits the IRA through your estate — and she may not — she'll lose decades of tax-deferred investment growth.

A carelessly completed beneficiary form can also hurt your survivors, because it's open to misinterpretation, says Slott. If you've listed several beneficiaries, for example, be sure you also specified how the IRA is to be divided, by writing a percentage next to each name.

Next week, I'll describe additional ways to make life easier for your IRA beneficiaries.

The bottom line

Don't assume your bank has your IRA beneficiary designation forms on file. Make sure that the forms are there, and check what they say.

More information

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