Thin(k) About Your Retirement: Don’t Drop The Ball At The End of Retirement

When is the last time you reviewed your beneficiaries on your retirement accounts? Now is a great time to check your beneficiaries! I have recently been reminded that pegging annual or semi-annual to-dos to Day Light Savings changes is a good practice.  There are certain things one should definitely do annually, such as a wellness check-up with your primary care physician, a change of batteries in your smoke detectors and checking your beneficiaries.

Why should you review your beneficiaries annually?  Your named beneficiary remains in place until you change it.  So, if you get married, you may want to name your spouse as primary beneficiary.  If you have a child or an additional child, you will likely want to add that child as contingent beneficiary.  If you divorce, you will want to amend your beneficiary(s) accordingly. In general, you will want to make sure your beneficiary(s) match your changing life circumstances.  

Qualified retirement plans (including 401(k) plans and IRA accounts) allow you to leave the money in the account to your named beneficiary(s) upon your death. This is a nice feature because the money goes directly to the beneficiary(s) without having to go through your estate.  Most plans and accounts allow you to name primary and contingent beneficiary(s). You can usually name multiple beneficiaries at both the primary and contingent level assigning a percentage of the account to each.  The way it works is the account will first be distributed to the primary beneficiary(s) according to desired percentages.  If none of the primary beneficiaries are living, the account will be distributed to the contingent beneficiary(s) according to the stated percentages.

Most plans allow you to name individuals, trusts, the estate or an entity as beneficiary.  In Louisiana, if you are married, your spouse must be your primary beneficiary unless your spouse signs off allowing you to name another primary beneficiary.  If you are not married, you may name any of the types of beneficiary listed above.

A regularly planned review will help ensure that you leave your retirement plan money to the correct person upon you reaching the end of retirement.

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