You might not be able to spend all the money in your 401(k) plan before you die. If that happens, your retirement savings will pass to the person you name as the beneficiary of the account. The information on your 401(k) beneficiary form typically supersedes what is written in your will, so it’s important to keep this form up to date for all your retirement and investment accounts.


Here’s how to make sure your 401(k) savings gets to your intended heir.

  1. Assign a beneficiary.
  2. Select contingent beneficiaries.
  3. Update beneficiaries after major life events.
  4. Tell your beneficiaries about your accounts.

1. Assign a Beneficiary

Naming a beneficiary of your retirement account allows him or her to receive your financial bequest without needing access to your will, financial documents or go through the court system.

“It is important to designate a beneficiary on your 401(k) account so that it transfers to your desired heir without having to go through the probate process,” says Arielle Minicozzi, a certified financial planner at Sphynx Financial Planning in Chandler, Arizona. “When designating a beneficiary, you should carefully consider who that will be, just like you would for any other asset you intend to leave to your heirs.”

Many people choose to name a spouse, children or other relatives as their beneficiary. If you want to leave the assets in your 401(k) plan to someone other than your spouse, he or she may need to sign a spousal consent form.

You can name several primary beneficiaries and have the assets equally split among them or assign a specific percentage of the account to each person. If you name multiple primary beneficiaries and one dies before you, the assets will be split proportionally among the remaining primary beneficiaries.

2. Select Contingent Beneficiaries

Your contingent beneficiary receives your assets if all of the primary beneficiaries are no longer living. For example, you might name your spouse as the primary beneficiary of 100% of the account balance and your three children as contingent beneficiaries who would each receive a third of the cash if your spouse passes away before you.

“Make sure to review your beneficiary designations at least one time per year to ensure each beneficiary, and the percentage you have designated to them, is still appropriate,” Minicozzi says.

Take care to list each beneficiary separately and the percentage of assets that will go to each person.

“In order to avoid the hassle of listing many beneficiaries, clients will instead list only one child as a beneficiary, with the informal understanding that this child will disperse the 401(k) account equally to the other children who were not listed as beneficiaries,” says Michael Caligiuri, a certified financial planner at Caligiuri Financial in Columbus, Ohio. “This can turn into a huge mess since the one child listed as the beneficiary doesn’t legally have to do anything. Therefore, it’s better to take the extra five minutes to list multiple beneficiaries, if that is what the client’s true intention is.”

If you don’t designate a beneficiary, or your primary and contingent beneficiaries die before you, your surviving spouse will typically inherit your 401(k) balance. If you don’t have a spouse or living beneficiaries, the funds in your account are generally turned over to your estate.

3. Update Beneficiaries After Major Life Events

When you start a job in your 20s, you might list your mother, father or sibling as the beneficiary of your account. When you get married, you might want to change your beneficiary to your spouse. If you plan to leave your retirement account balance to your children, you need to update your beneficiary form upon the birth of each child.

Divorce or remarriage is another reason to change your beneficiary forms. If you remarry but leave an ex-spouse’s name on your most recent beneficiary document, your ex-spouse will inherit your remaining retirement assets.

Beneficiary forms are unique to each 401(k) plan, so if you have multiple 401(k) accounts with previous employers, you need to update all of them. You can also consolidate old 401(k) accounts or roll them over into an IRA to make your beneficiary designations and investments easier to manage. Many 401(k) plans allow you to update your beneficiaries online.

4. Tell Your Beneficiaries About Your Accounts

Your heirs may need to contact the financial institution to receive their inheritance. Tell your beneficiaries where you have accounts, so they know what to expect and can claim your unused retirement funds.

“If you open an account, make sure to set a beneficiary, and if you are not sure, go through all your accounts,” says Mark McCarron, a certified financial planner at Bond Wealth Management in Charlottesville, Virginia. “Make sure that everyone has the information so that there is no question and access to those funds is just immediate.”


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