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LAS VEGAS \u2014 Millions of households have individual retirement accounts<\/a>, and simple mistakes can be expensive, experts warn.\u00a0\u00a0<\/p>\n One of the most common IRA errors is overlooking beneficiary designations<\/a>, which dictate who receives the account after you die, according to Brandon Buckingham, vice president for the advanced planning group for Prudential Retirement Strategies. <\/p>\n It’s “the biggest mistake people make,” said Buckingham, speaking at the Financial Planning Association’s\u00a0annual conference<\/a>\u00a0on Tuesday.\u00a0Some investors don’t name a beneficiary or leave an outdated heir. The latter is particularly problematic, since beneficiary designations override what’s outlined in your will, he said.\u00a0\u00a0<\/p>\n “I can’t tell you how many times I’ve seen an ex-spouse inherit an IRA or 401(k) account,” Buckingham said. “It happens all the time.”<\/p>\n More from Your Money:<\/p>\n Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.<\/p>\n As of mid-2024, nearly 58 million<\/a> U.S. households, or about 44%, owned IRAs, up from 34% a decade ago, according to a March report from the Investment Company Institute, a trade organization. These accounts collectively held $16.2\u00a0trillion in assets around mid-year 2024.<\/p>\n That growth has been fueled by employer retirement account rollovers, such as 401(k) plans, with nearly 60% of pretax traditional IRAs including rollovers in 2024, the report found.<\/p>\n With trillions of wealth in IRAs, investors need to stay organized with beneficiary designations, which can easily be overlooked when you have multiple accounts, Buckingham said.<\/p>\n The ‘worst beneficiary’ for your IRA<\/p>\n If you don’t name a beneficiary for your IRA, the default is usually your estate,\u00a0Buckingham said.<\/p>\n “The worst beneficiary you can ever have for a retirement account is the estate, whether it’s on purpose or by default,” he said.<\/p>\n If you name a beneficiary, the account is payable to the heir upon death. But without a beneficiary, the assets go through probate, a legal process to settle the estate after death \u2014 which can be costly and time-consuming, Buckingham said. \u00a0<\/p>\n In the meantime, income to the estate from the IRA is subject to a “very compressed tax bracket” because it hits the 37% rate once earnings exceed $15,650<\/a> for 2025, he said. By comparison, a married couple filing jointly reaches the 37% income tax bracket<\/a> around $750,000 of taxable income for 2025.\u00a0\u00a0\u00a0\u00a0<\/p>\n