Do you know what will happen to your retirement savings if you were to pass away? Here are some things you should know about naming beneficiaries that could save your loved ones’ time, money and frustration.
Facts about beneficiary designations
48% of people don’t have a named beneficiary.1 Generally, if you are married, your retirement account will automatically go to your spouse. If you plan on leaving money with your children or another person, your spouse would need to sign off on the change. If you are single, your savings becomes a part of your estate. This means the courts will decide how your estate is distributed. Keep in mind that this process can be long and expensive process for your grieving loved one.
Types of beneficiaries
Primary, Contingent, and Charities can be chosen as beneficiaries.
- Primary: This is a person/entity you designate as first in line to inherit your assets. More than one can be named.
- Contingent: This is your backup to your primary beneficiary. If your primary beneficiary has passed away prior to your death, the contingent will be next to receive the specified share of your account.
- Charities: Charitable organizations can be listed as primary or contingent beneficiaries, although they must have the legal ability to accept your assets. Information on the charity will be needed as well as knowing the charity’s instructions on who should be the contact person.
While a will can be a great estate-planning tool, this doesn’t cover your retirement assets. Naming your beneficiary designations in your retirement plan would help your loved ones avoid more paperwork and stress.
You should review your beneficiary designations when you have life changes, like marriage, divorce, children, or death, in the family. We suggest reviewing your beneficiary designation annually.
If you designate a minor/child, nominate a custodian to manage the money with you/your beneficiary’s interest.
You can designate your beneficiary in a matter of minutes
To designate your beneficiary online, sign in to your 401(k) account on your provider’s website. Locate the beneficiary section and add or update your beneficiary. If you are married and opt not to designate your spouse, additional signatures may be required.
For more information, please contact Marietta Wealth at (404) 549-6930 or email@example.com.
1 Fidelity analysis of 18.9M active plan participants with a balance as of November 2021.
Beneficiary Flyer; Transamerica, June 2022
This article was originally published in the February 2023 Retirement Times newsletter. To read more, download the newsletter here.
This newsletter is distributed for general informational purposes only. No part of this newsletter nor the links contained therein is a solicitation or offer to sell investment advisory services. Information throughout this newsletter is obtained from sources which we believe reliable, but we do not warrant or guarantee the timeliness, accuracy or completeness of this information and the information presented should not be relied upon as such. All investments involve risk of loss, including the possible loss of all amounts invested, and nothing within this newsletter should be construed as a guarantee of any specific outcome or profit. This newsletter is confidential and is intended solely for the information of the person to whom it was delivered and may not be reproduced or redistributed in whole or in part, nor may its contents be disclosed to any other person under any circumstances.