New York residents can generally leave funds within an IRA to whoever they feel deserves it the most. If there is no person worthy of receiving the money, it may be possible to donate it to a charity. However, how an IRA is transferred generally depends on who is receiving it. For instance, if an IRA is left to a spouse, he or she could simply roll that money into his or her own account.
If a child or other family member is named as a beneficiary to an IRA, he or she may roll the money into an inherited IRA. This may be beneficial because those recipients would be able to stretch out the tax benefits for their entire lives. However, this may be moot if the child who receives the money needs it immediately. It is also important to note that the stretch provision isn’t available if the child was not named as a beneficiary.