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 If you love your family, you have to list a beneficiary or you subject them to delays, costs, and frustrations. 

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 State Courts will decide how your estate is distributed. Keep in mind that this can be a long and expensive process for your grieving loved one.

This correspondence is to help you understand the different types of beneficiaries you can use.

Types of beneficiaries

There are generally two different ‘groups’ of Beneficiaries; Primary and Contingent. The Primary Beneficiary gets the money if you pass away, and the Contingent Beneficiary receives the money if you AND the Primary Beneficiary pass away.

•  Please be aware that Charitable organizations can also 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.

Wills

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.

Life changes

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.

Minors

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.

DO THE ABOVE NOW.  Over 50% of 401k participants have not selected a beneficiary.

Learn how to add/update your beneficiaries by contacting Wellspring Financial partners at 1 (844) 203-2402, or email info@wellspringfp.com.

Sources:

¹ Fidelity analysis of 18.9M active plan participants with a balance as of November 2021. Beneficiary Flyer; Transamerica, June 2022.

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