Facebook Pixel Logo

If You Love Someone, Make Them Your Beneficiary!

February brings us closer to spring and the beginning of annual benefit plan enrollment. Soon you’ll be reviewing your annual plan. When choosing options for 2019, make sure you review the beneficiaries listed for your retirement and insurance plans.

With people changing jobs more often and hard-to-understand financial paperwork, it’s all too easy for employees to forget these small but hugely important details on policy and plan documents following a job change, an account merge, or a divorce, which could result in your 401k going to a former spouse. An ex-spouse doesn’t automatically translate to ex-beneficiary as far your retirement plan is concerned. Don’t let your ex inherit your cash.

However, many people who remarry may want to leave retirement funds to their children from a former marriage. Federal law governs employer-sponsored retirement plans, and many plans require a current spouse to waive their right to inherit if they are not listed as the beneficiary. If you want your 401k to go to your children, be sure to get your new spouse to document their consent to this arrangement in writing, as well as listing your children as the beneficiaries.

IRAs are a different story, however. Whoever is listed as the beneficiary of the IRA will inherit the assets. So rolling over your 401k to an IRA before you remarry is a good option to consider.

Insights for leaders.

Get valuable resources, news and industry content delivered straight to your inbox from the Questis newsletter.