A recent private letter ruling discusses the importance of naming both a primary beneficiary and a contingent beneficiary for your retirement accounts (Roth IRAs and Traditional IRAs), in case a primary beneficiary should die before you do.  In this case, the primary beneficiary at the death of the participant had predeceased the participant. No contingent beneficiary had been designated. By the terms of the documentation governing the relevant account, the estate of the participant was to have received the benefits of the IRA.  The decedent's spouse was the sole beneficiary and Personal Representative of the estate of the participant.  After an analysis of the rules regarding spousal rollovers, the IRS determined that since the surviving spouse was the sole beneficiary of the estate she was entitled to take advantage of the spousal rollover rules.  It would have been considerably less costly and more timely had the participant named his spouse as the primary or contingent beneficiary of the IRA before his death.

We recommend to our clients that they try to make it a rule to review the beneficiary designations for IRAs, retirement accounts, annuities and life insurance policies on a periodic basis.