Updating Your Beneficiaries

May 5, 2023 | Financial Education

WHEN & WHY YOU SHOULD UPDATE YOUR RETIREMENT PLAN BENEFICIARIES

There is no hard and fast rule for how often you should check or update your retirement plan beneficiaries. However, it’s generally a good idea to review your beneficiaries at least once a year or after major life changes, such as the birth of a child, a marriage, a divorce, or a death in the family. You should also review your beneficiaries when you start a new job, switch retirement plans, or when your employer changes their retirement plan administrator. There are several important reasons why you should periodically verify your employer’s retirement plan beneficiaries. Here are some of the most important ones:

  • Ensure your assets go to the right person: Verifying your retirement plan beneficiaries helps ensure that your assets go to the people you intend to receive them after you pass away. If you fail to keep your beneficiaries up to date, your assets could end up going to the wrong person or people, or even to the state.
  • Prevent legal disputes: Failing to update your beneficiaries can lead to legal disputes between your family members, which can be both emotionally and financially draining. By verifying your beneficiaries, you can avoid confusion and ensure that your assets are distributed according to your wishes.
  • Avoid costly taxes: If your retirement plan beneficiaries are not properly designated, your assets may be subject to significant taxes. By updating your beneficiaries regularly, you can help minimize tax liabilities and ensure that your assets are distributed in a tax-efficient manner.
  • Keep up with life changes: Life is full of changes, such as marriages, divorces, births, and deaths, all of which can have a significant impact on your retirement plan beneficiaries. By periodically verifying your beneficiaries, you can ensure that your plan is up to date with your current life circumstances.

In addition to these general guidelines, you may also want to consider reviewing your beneficiaries with the help of a financial advisor or estate planning attorney, who can provide guidance on how to ensure that your retirement assets are distributed according to your wishes.

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