When you think about your company retirement plan account, do you know what will happen to the money in the event of your passing? It’s not a pleasant topic, but it’s nevertheless important that you have a plan in place to ensure your legacy is looked after the way you want.
Enrolling in your retirement plan prompts you to name a beneficiary in the event of your death. Simply put, you designate someone to receive your account assets after your passing. Does your beneficiary plan currently reflect your wishes? Many people tend to overlook this detail, but it’s imperative that you keep this information up to date. Here’s how your account passes depending on your relationship status.
If You’re Single
Your retirement account assets go to the beneficiary you designate, no matter what you’ve written in your will, in other agreements or in court orders. In the event that you don’t formally designate a beneficiary, your account is handled based on the terms of your plan document. For some plans, that means your estate is named the beneficiary. Other plans utilize a hierarchy of relatives to name as beneficiaries. Do you know what your plan document states? It’s all the more reason to keep yourself in the know and up to date with your beneficiary designation choices. A financial professional, like your team of planners at Carnegie Investment Counsel, can review your plan document terms and help you determine a beneficiary.
If You’re Married
Your spouse automatically assumes the role of beneficiary, and they receive the assets of your retirement plan. If you want to name a different beneficiary, you and your spouse may need to sign a waiver with a notary present.
If You’re Separated or Divorced
Your ex-spouse will still be considered the beneficiary of your retirement plan account unless you formally change your beneficiary designation. This is true for any children you have, too, and it remains true no matter what your will states. (That’s why it’s imperative to keep your information updated.) Typically, after a divorce, an individual changes their beneficiary designation from their ex-spouse to their children.
Typically, after a divorce, an individual changes their beneficiary designation from their ex-spouse to their children. But in the event that you remarry, your second spouse may, depending on the type of account and which state you live in, automatically become the beneficiary on a new account, such as a savings account or 401k – unless you’ve formally designated your children to be the beneficiaries and your spouse consents to this decision.
Knowing what happens to your assets and ensuring that your beneficiaries are considered is an extremely important process. Stay informed about your retirement plan and ensure that it reflects your current wishes.
Our team is here to help you organize your plans and preparations. Contact Carnegie Investment Counsel for a consultation.
Need a Retirement Advisor?
If you are currently looking for help with retirement planning, contact us. We are happy to schedule an introductory meeting at your convenience.
