after loss

What Happens to a 401(k) or IRA When Someone Dies

By Jason Su · Updated October 21, 2026

When someone dies, a 401(k) or IRA does not pass through their will. It goes to the person named on the account — the beneficiary. If nobody is named, the account falls into the estate and the rules change. The short version: the beneficiary form, not the will, decides who gets the money.

Two things shape what happens next: who is named, and what kind of account it is. Spouses get different rules than everyone else, and a traditional account is taxed differently from a Roth.

The beneficiary form is the whole game

A retirement account is one of the few things that overrides a will by design. The account’s own paperwork says where the money goes, and that instruction wins.

That is why an out-of-date beneficiary form is the most common mistake here. Someone who divorced years ago can still be named on an old 401(k), and the account will go to them, whatever the will says.

If you are not sure who you have named, log into each account and look. This is a two-minute check that decides more than most of the planning people do.

When the spouse is the beneficiary

A surviving spouse has the most flexible set of choices:

• Roll it over into their own IRA. The account becomes theirs, the same as if it had always been theirs, and they keep their own withdrawal schedule.
• Treat it as an inherited account. In some situations this lets them take money earlier without penalty.
• Take a lump sum. Usually the least tax-friendly option, but sometimes the right one for the situation.

The rollover option is the one most spouses choose, because it keeps the tax advantage going. A spouse has choices nobody else gets.

When someone else is the beneficiary

Anyone who is not a spouse — an adult child, a partner, a sibling — inherits the account into what is called an inherited IRA. The rules here changed a few years ago, and they are stricter than they used to be.

The headline change: most non-spouse beneficiaries now have to empty the account within ten years. The old “stretch” approach, where you could spread withdrawals across your own lifetime, is gone for most people.

A small group still gets the older, gentler rules — a spouse, a minor child (until they reach adulthood), someone disabled or chronically ill, and a person not more than ten years younger than the original owner. For everyone else, it is the ten-year clock.

The exact withdrawal requirements inside those ten years depend on whether the original owner had already reached the age where required withdrawals begin. This is detail worth confirming with the provider or a tax professional rather than guessing.

When nobody is named

If the beneficiary line is empty, or it names “the estate,” the account goes through probate. That is the outcome to avoid, and here is why:

• It costs time and money, because the account gets pulled into the court process.
• It can lose the tax advantage. An account that passes through an estate often has to be emptied faster than one that passes to a named person.

An account with no beneficiary is a gift of delay and taxes to the family. Fixing it is a matter of logging in and naming someone. For what that court process actually is, see what probate is.

Traditional vs Roth

The tax treatment carries over to the person who inherits:

Account	How the money is taxed
Traditional IRA or 401(k)	Withdrawals are taxed as ordinary income, for you and for the person who inherits
Roth IRA or Roth 401(k)	Withdrawals are generally tax-free, if the account has met the holding rules

So a Roth is not just a tax choice for you — it is a quieter, cleaner inheritance for the person who receives it. The trade-off is that you paid the tax on the way in, instead of on the way out.

401(k) vs IRA

There is one difference that matters:

• A 401(k) usually names the spouse automatically. Federal law generally requires the spouse to be the beneficiary unless the spouse signs a written waiver. An IRA does not have that default.
• An IRA lets you name anyone, freely, on the form.

So a 401(k) can surprise a family twice: once when the spouse is the automatic beneficiary, and again when an ex-spouse is still named because a waiver was signed and never updated.

Frequently asked

Does the will decide who gets my 401(k)?

No. The beneficiary form on the account decides. If the form is empty, the account goes through the estate. See how to review your plan once a year for the check that catches this.

Can I name my children instead of my spouse?

On an IRA, yes. On a 401(k), generally only if your spouse signs a written waiver. The plan’s own rules apply.

Do I have to empty an inherited IRA in ten years?

Most non-spouse beneficiaries do, under the current rules. Spouses, minor children, and a few other groups do not. Confirm your specific situation with the provider or a tax professional.

Is a Roth better for my family?

For the person who inherits, often yes, because the withdrawals are generally tax-free. But it is a trade-off, because you paid the tax on the way in.

What if I do not know who I named?

Log in and check. Every provider shows the beneficiary somewhere in the account settings, and this is the single most valuable two minutes in estate planning.

Next step

Log into every retirement account today and read the beneficiary line out loud. Fix anything that names an ex-spouse, names nobody, or names a person who is no longer the right choice.

Then record what you found using the Retirement Account Inventory, so the family does not have to repeat the search.