Per stirpes on an IRA beneficiary form means that if one of your named beneficiaries dies before you do, that person’s share passes down to their own children rather than being redistributed among your other surviving beneficiaries. The phrase is Latin for “by the branch,” and it keeps each family line’s portion intact across generations. It is a small notation on a routine form, and it controls where potentially large sums of money go.
How the Designation Actually Works
When you name someone as an IRA beneficiary and add “per stirpes,” you are giving the custodian a rule to follow if that beneficiary predeceases you. The rule is simple: their share drops down to their descendants in equal parts. Your other beneficiaries keep exactly what you intended for them. Nothing gets reshuffled among the survivors at the top level.
Without the per stirpes notation, most custodians default to per capita treatment. Under per capita, every survivor at the same generational level splits the account equally, and a deceased beneficiary’s children can end up with nothing if their aunts and uncles are still living. This is how grandchildren get accidentally disinherited by parents who assumed the money would find its way down the family tree on its own.
Custodians follow the branching logic automatically once the notation is on file. Vanguard, for instance, administers per stirpes by distributing assets equally among the surviving members of the first generation of descendants closest to the account holder, then splitting a deceased member’s share among that member’s own children.1Vanguard. Inherited Retirement Account Beneficiary Identification Form The same logic applies to traditional and Roth IRAs alike.
A Dollar Example
Say you have a $900,000 IRA and name three children as equal beneficiaries per stirpes: Mary, John, and Jim. If all three survive you, each receives $300,000.
Now change one fact. Mary dies before you and leaves two children. Under per stirpes, John and Jim still receive $300,000 each. Mary’s $300,000 share passes to her two children, who receive $150,000 apiece. The grandchildren inherit only what would have been their mother’s branch.
Compare that with a per capita distribution. The four surviving people (John, Jim, and Mary’s two children) would each receive $225,000. Mary’s branch would collect $450,000 across two grandchildren, more than either John or Jim gets alone. Per stirpes prevents that redistribution.
If a deceased beneficiary leaves no living descendants, their share typically gets redistributed among the other surviving branches at the same generational level. In that scenario, if Mary had died childless, John and Jim would each receive $450,000.
Putting Per Stirpes on the Form
Every IRA custodian requires a beneficiary designation form, and this form is where the per stirpes instruction lives or dies. You will need the full legal name, date of birth, Social Security number, and relationship for each primary and contingent beneficiary.2J.P. Morgan Asset Management. IRA Beneficiary Designation Form Some forms include a per stirpes checkbox next to each beneficiary. If yours does not, write “per stirpes” next to the name. That handwritten notation carries legal weight.
A form that just says “my children, equally” is a per capita form by default. If one child has already died when you pass, the entire balance goes to the surviving children and nothing flows to the deceased child’s kids.
For complex families, some custodians accept custom beneficiary language drafted by an attorney. The custodian’s legal department reviews the document to confirm it has enough detail to identify and locate every potential heir. The core data points still apply for each named individual: legal name, Social Security number, and date of birth. Many firms accept digital submissions through online portals, but confirm in writing that the custodian recorded the per stirpes notation, and keep that confirmation somewhere your family can find it.
The Form Overrides Your Will
This is the most misunderstood fact in IRA planning: the beneficiary designation on file with your custodian controls who gets the money, not your will. If your will says “divide everything equally among my three children” but your IRA form names only one child, the IRA goes entirely to that one child. Courts consistently enforce the custodian’s records when a valid beneficiary form exists.
The reason is structural. An IRA is a contract between you and the custodian, and the beneficiary designation is part of that contract. It operates outside of probate entirely.3Internal Revenue Service. Retirement Topics – Beneficiary Your heirs do not need court approval to claim the funds, which is an advantage. But a stale or incorrect form can unravel years of estate planning. Review your designations whenever family circumstances change.
When Per Stirpes Sends Money to Minor Grandchildren
A per stirpes designation can route IRA assets to grandchildren who are still minors, and that creates a practical problem. A child under 18 cannot legally own an IRA or sign the paperwork to open an inherited account. If you have not named a custodian to manage the funds, the family will need a court proceeding to appoint a guardian of the estate, which means legal fees, delays, and a judge making decisions about the money.
The cleaner approach is to designate a custodian under the Uniform Transfers to Minors Act when you set up the beneficiary form. A UTMA custodian can manage the inherited IRA without court involvement. The custodianship terminates when the child reaches the age set by state law, which is 21 in most states, though some states let the transferor set a later age up to 25.
For larger accounts, a trust may offer more control. A conduit trust passes all IRA distributions through to the child as they are received. An accumulation trust lets the trustee hold distributions inside the trust for professional management and creditor protection. Complexity and cost are the tradeoff, but for a significant inheritance flowing to a teenager, the tradeoff is often worth it.
One boundary worth knowing: minor children of the original IRA owner qualify as “eligible designated beneficiaries” under the SECURE Act and can stretch distributions over their own life expectancy until they reach the age of majority. Grandchildren inheriting through per stirpes generally do not get that treatment.3Internal Revenue Service. Retirement Topics – Beneficiary
Tax Rules Your Branch Will Face
Distributions from an inherited traditional IRA are taxed as ordinary income to the beneficiary. Whatever the original owner would have owed, the heir now owes. Timing matters, because a large distribution in a single year can push a beneficiary into a much higher bracket than they normally occupy.
Inherited Roth IRAs work differently. Withdrawals of contributions are always tax-free, and withdrawals of earnings are tax-free as long as the Roth account has been open at least five years. If the account is younger than five years at the owner’s death, earnings withdrawn before that five-year mark are taxable.3Internal Revenue Service. Retirement Topics – Beneficiary
Most non-spouse beneficiaries who inherited in 2020 or later must empty the account by December 31 of the year containing the tenth anniversary of the owner’s death. Whether annual withdrawals are required during that window depends on when the owner died relative to their own required minimum distribution age. If the owner died before RMD age, no annual distributions are required and the beneficiary can withdraw any amount at any time as long as the account is empty by year ten.4Federal Register. Required Minimum Distributions If the owner died after RMD age, the beneficiary must take annual distributions with the remainder cleared by the end of year ten.
Beneficiaries inheriting through per stirpes are subject to these same rules. A common mistake is taking only the minimum each year, which leaves a large balance that must come out in year ten as a single taxable hit. Spreading withdrawals more evenly across the decade almost always produces a better tax result on an inherited traditional IRA.
Disclaiming a Per Stirpes Share
A beneficiary who does not want their share can execute a qualified disclaimer, an irrevocable written refusal to accept the assets. The disclaimer must reach the IRA custodian within nine months of the account owner’s death, and the disclaiming person cannot have already accepted any benefits from the account.5Office of the Law Revision Counsel. 26 USC 2518 – Disclaimers
When a per stirpes beneficiary disclaims, they are treated as though they died before the account owner. Their share then flows down to their own children under the per stirpes framework, or if they have none, redistributes among the other surviving branches. A beneficiary in a high tax bracket might disclaim so the funds pass to their children, who could be in lower brackets and spread the 10-year window more efficiently. The decision is permanent and cannot be reversed once signed.