Question: Should someone who inherits an IRA or 401(k) retitle it in their name instead of just taking the money as a beneficiary? How does that process work? I’m wondering how my own 401(k) and IRAs should be handled when they’re passed on.

Ric: If you have a spouse and he or she is your beneficiary, the spouse can put his/her name on it — end of story.

But say you have no spouse, your spouse is not your beneficiary, or your spouse passes away before you do. In that case, the beneficiary can’t simply place the IRA into an IRA of their own name. It’s now called a “decedent” or “beneficiary” IRA — and both your name (as decedent) and their name (as beneficiary) will appear on the account registration.

The beneficiary can liquidate the account immediately, but the money received will be fully taxable. For this reason, many beneficiaries prefer to spread the distributions over their lifetimes in what is called a “stretch-out” IRA. When doing this, the beneficiary takes a small distribution annually, paying taxes only on the amount received each year. (The IRS stipulates the minimum that must be withdrawn annually, based on several factors including the beneficiary’s age.)

It’s vital that you keep your beneficiaries current. Remember that the person whose name appears on the account paperwork is the one who gets the money — regardless of what is stated elsewhere, such as in your will or trust. And if your children are minors, other factors come into play. So there’s a lot more to it than just retitling an IRA or 401(k). I suggest you talk to both a financial advisor and an estate attorney to explore your options fully.