How to Review and Update Your Retirement Plan Beneficiaries

Reviewing and updating your retirement plan beneficiaries is an important part of financial planning and the funding involved in Trust planning that can significantly impact the distribution of your assets and the financial well-being of your loved ones after your passing. Ensuring that your retirement assets go to the intended recipients according to your wishes requires periodic checks and updates to your beneficiary designations. Here is a step-by-step guide on how to do it:

Step 1: Review Current Beneficiaries

Log in to your retirement account online or contact your plan administrator to obtain current beneficiary information. Check the names, relationships, and share percentages of your current beneficiaries. Make sure you get written confirmation of your Beneficiaries. We recommend printing this information on a yearly basis even if you didn’t make any changes.

Step 2: Consider Changes in Circumstances

Consider any life events such as marriage, divorce, the birth of a child, or the death of a previously named beneficiary that might necessitate a change in your beneficiary designations.

Step 3: Decide on Primary and Contingent Beneficiaries

Primary beneficiaries are your first choice to receive the assets. You can name multiple primary beneficiaries and specify the percentage of assets each one will receive. Contingent beneficiaries are those individuals or entities that will inherit your assets if no primary beneficiaries survive you. They are essentially a “backup” to your primary choices.

Step 4: Gather Required Information

For each beneficiary, you will need their full legal name, relationship to you, Social Security number (or Tax Identification Number), and date of birth.

Step 5: Update Your Beneficiaries

Many retirement plans allow you to update your beneficiaries online through your account portal. If online updates are not an option, request a beneficiary designation form from your plan administrator. Complete, sign, and return it according to the instructions provided.

Step 6: Consider Special Situations

If you are naming a trust or a minor as a beneficiary, consider consulting with a financial advisor or your attorney to ensure your plans are appropriately structured. Some plans, particularly 401(k)s and other employer-sponsored plans, may require spousal consent if someone other than your spouse is named as a primary beneficiary.

Step 7: Review and Confirm Updates

After submitting your changes, follow up to ensure they are processed. You should receive confirmation from your plan administrator.

Step 8: Keep Records and Communicate

Store a copy of the updated beneficiary designation forms with your important documents. Consider informing your Executor, death trustee, or in some case the beneficiary themselves, of their designation and any relevant instructions or wishes you have regarding the assets.

Step 9: Regular Review

Make it a habit to review your beneficiary designations periodically, especially after major life events, to ensure they continue to reflect your current wishes.

Important Considerations

Be aware of potential legal and tax implications, particularly with complex family situations or large retirement accounts.

Work with an Experienced Estate Planning Attorney

When reviewing and updating your retirement plan beneficiaries, it is important to ensure that these choices align with your overall estate strategy. Wilson Law PLC can offer personalized advice so your retirement plan complements your broader estate goals seamlessly. For more information or to arrange a consultation, please call us at 866-603-5976 or use our contact form, and we will get in touch to schedule a meeting.