A designated beneficiary is an individual (person) beneficiary whose is designated as beneficiary of a qualified plan account, 403(b) account, 457(b) plan or IRA, by the owner/participant . The designated beneficiary can be the person who the retirement account owner identifies on the beneficiary form to inherit the retirement account balance, or the person who is the beneficiary under the terms of the plan document. A qualified see-through trust is also a designated beneficiary.
A beneficiary that does not qualify to be a designated beneficiary is commonly referred to in the industry as a non-designated beneficiary. Examples include an estate and a charity.
IRC §401(a)(9)(E), Treas. Reg. §1.401(a)(9)-4, Q&A-1
Additional Helpful Information
Whether a retirement account has a designated beneficiary is determined by September 30 of the year following the year the retirement account owner dies. Treas. Reg. §1.401(a)(9)-4, Q&A 4(a)-(c)
An individual can still be a designated beneficiary, even if the person was not named on the beneficiary designation form, providing the person can be identified as the beneficiary. Treas. Reg. §1.401(a)(9)-4, Q&A-1]. For instance, assume that an individual did not name a beneficiary on the beneficiary form, but the default provisions of the plan document or IRA agreement says something to the effect that “…if no beneficiary is named, the designated beneficiary will be the spouse, then in such a case, the spouse would be the designated beneficiary, and have the same rights that he/she would have had, had he/she been named as the beneficiary on the beneficiary form.