What is the difference between primary and contingent beneficiaries?

After you pass away, primary beneficiaries receive your assets from an IRA or ESA. A beneficiary is either a person or an entity. And the division between recipients must total 100%.

You'll need to name at least one primary beneficiary before you open an account. You also have the option of naming contingent beneficiaries in case the primary beneficiary passes away.

Tip: If an IRA owner is married, certain states require their spouse be at least a 50% primary beneficiary of your IRA. Please consult a tax advisor for additional information.