Who you can name
Individuals you can name include a spouse, children, parents, siblings, or friends. Entities you can name include a trust, a charitable organization, or an educational institution. These categories can be mixed freely across primary and contingent designations.
Why a spouse has the most options
A spouse has the most flexibility of any beneficiary type. When a surviving spouse inherits a retirement account, they can roll the funds into their own IRA or 401(k) and treat the assets as if the account were always in their name. Alternatively, a surviving spouse can elect to be treated as a beneficiary, which allows distributions without the early withdrawal penalty if they are under age 59 1/2.
When naming a trust makes sense
Naming a trust as beneficiary can be useful when your heirs include minors, individuals with disabilities, or family members who need managed distributions. A trust also gives you more control over who ultimately receives the funds after the first beneficiary. Because trust taxation can be complex, consult an estate planning attorney before choosing this option.
When your spouse has to consent
If you are married and want anyone other than your spouse to receive any portion of the primary beneficial interest, your spouse must provide written consent. The consent is captured on the beneficiary designation form itself, so it needs to be in place before the form is signed and submitted. Contingent beneficiaries are not affected; you can name anyone in that tier without consent, and the reasons behind the requirement differ slightly between an IRA and a Solo 401(k).
Why your will does not control this
Your beneficiary designation form controls who inherits your plan, not your will. A will has no legal authority over retirement account assets. Keep your designation form current and make sure your estate planning documents are aligned.