Remember way back when, you filled out that form for your IRA or 401(k) at your very first job – back before you were married or had kids. You may have designated your closest cousin Casey as the beneficiary of your retirement savings and never thought about it again. Your retirement accounts have likely grown substantially over the years and unless your beneficiary information is updated, the people or organizations you care about the most could lose out on this inheritance – lucky Casey.
It’s quite common for many of us to keep important documents, such as a will, up to date but overlook beneficiary designations in our retirement accounts and insurance policies. What we don’t realize is beneficiary designations are not governed by our estate and take precedence over what is stated in a will. In other words, the provisions you carefully put together in your will are superseded by your named or default beneficiaries on your retirement assets such as your IRA and 401(k) plans.
It’s important to review and update beneficiary designations periodically – especially when you experience major life changes such as marriage, divorce, death of a spouse, or birth of children or grandchildren.
A financial professional can help you navigate the many options and requirements associated with choosing beneficiaries. Typically, establishing beneficiaries or making changes to your account is as simple as filing out a form – a simple step to ensure your retirement assets are inherited as you intended.