A look at the importance of designating beneficiaries.

Who have you chosen to inherit your funds?

Can you imagine what would happen if the money in your account went to someone you were estranged from? Or if your heirs found out that you never named a beneficiary in the first place?

This occurs more often than you might think – and a little attention to detail today may help to prevent surprise or disappointment later.

What takes precedence – a will, a family trust, or a beneficiary form?

In all but rare situations, the beneficiary form comes first. If you die, your IRA or 401(k) custodian (i.e., the investment company that hosts your retirement savings account) will determine who gets the assets in your IRA or 401(k) per your request stated on the beneficiary form. Whatever you state in your will or living trust will be legally irrelevant barring exceptional circumstances.1

IRAs and 401(k)s commonly have primary beneficiaries (first in line to the assets) and contingent beneficiaries (second in line, third in line, etc.). The important thing is to have the beneficiary designations up to date.

Your beneficiary choices may need to change with the times.

When did you open your first IRA? When did you buy your life insurance policy? Are you still living in the same home and working at the same job as you did back then? Have your priorities changed a bit – perhaps more than a bit?

Decades may have passed since you opened that retirement account or even checked the balance. Back then, you presumably filled out a form stating who you wanted those assets to go to if you pass away.

In that moment, you may have made one of your biggest estate planning decisions. It is also important that from time to time you make sure your decision is still the right one.

Plan to avoid IRA pitfalls.

Here are two of the worst-case scenarios when it comes to outdated beneficiary decisions:

  1. With IRA’s, if there is no designated beneficiary, the IRA custodian decides how those funds will be distributed per its default policy. The brokerage firm first directs the IRA assets to a spouse, then an estate.
  2. Things are a bit less tangled with 401(k)s. If a 401(k) plan participant dies, the spouse is the primary beneficiary – it is federal law. So the spouse will inherit the assets, unless he or she earlier waived rights to them on the beneficiary form or another form. What if the plan participant isn’t married? Some 401(k)s will permit the assets to pass to a plan participant’s children if no spouse is alive and no beneficiary form can be found.1

We’ll help you review your beneficiary designations –

Contact our office to talk to David, Jack or Ron about updating your beneficiaries today!


This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – forbes.com/sites/ashleaebeling/2018/01/08/five-retirement-housekeeping-moves-for-the-new-year/ [1/8/18]
2 – thebalance.com/why-beneficiary-designations-override-your-will-2388824 [8/28/17]
3 – nolo.com/legal-encyclopedia/estate-planning-when-you-re-married-noncitizen.html [2/4/18]
4 – corporate.findlaw.com/law-library/who-should-be-the-beneficiary-of-your-qualified-retirement-plan.html [2/4/18]
5 – ameriprise.com/research-market-insights/financial-articles/insurance-estate-planning/charitable-giving/ [2/4/18]



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