"This can be a minefield that can't be rectified after you are gone."
The (Crystal Lake, IL) Northwest Herald states in "Rectifying the retirement minefield" that naming a beneficiary for your Traditional IRA or employer-sponsored retirement plan may be one of the most important financial decisions of your life. Your beneficiary will get the funds in your retirement plan after you pass away.
If you're married, you'll want to designate your spouse as the primary beneficiary. Federal law requires your surviving spouse to be the primary beneficiary in employer-sponsored retirement plans, like a 401(k), unless your spouse signs a written waiver letting you name someone else as the primary beneficiary. In most cases, spouses will name each other as the primary beneficiaries to their retirement plans. Those funds help maintain the lifestyle they've enjoyed in their marriage.
The big tax advantage of doing this is that a spouse can transfer the IRA or plan into his or her name without have to pay any taxes, which will further maintain the plan's tax deferral status. Retirement assets that pass between husband and wife at death don't create a taxable event. So the surviving spouse as the beneficiary is free to use the inherited funds as they want after their spouse's death. Be aware that your spouse might remarry and thereafter name a new spouse as the primary beneficiary instead of your children.
Unfortunately, many folks think that designating their estate or trust as the beneficiary of their retirement plans is enough to be safe. Not so. If the estate is the beneficiary, you can set up an expensive legal mess for the people you really intend to be the beneficiaries. Don't let a judge make the decision. If you are set on having a trust as a beneficiary, make sure that you speak with your estate planning attorney to be certain that the language in the trust will provide your heirs with the benefits legally available. Take the time to look at all of your beneficiary designations on your retirement plans, IRAs, and any other assets that provide for a beneficiary, like life insurance and annuities.
Reference: The (Crystal Lake, IL) Northwest Herald (November 29, 2015) "Rectifying the retirement minefield"