Divorce vs. Legal Separation in Employer Plans

In the current issue of its newsletter, Employee Plans News (Issue 2013-3, September 13, 2013), IRS has an article on one of the differences between divorce and legal separation as it impacts employer retirement plan rules.

Background
In most employer retirement plans, a spouse is entitled to inherit plan benefits, even if another individual is named on the beneficiary form. A spouse must sign a waiver, usually provided by the plan, before an individual other than the spouse can inherit those benefits.

Most plan participants complete a beneficiary form naming their spouse as the beneficiary of plan benefits. This can create problems later if the plan participant divorces that spouse and does not complete a new beneficiary form naming someone other than the ex-spouse as the new beneficiary of those plan benefits - if the participant has not remarried. At the plan participant’s death, the ex-spouse will inherit the plan benefits, even if they were waived as part of the divorce settlement.

To mitigate this problem, some plans incorporate a provision that automatically removes an ex-spouse as a plan beneficiary when the plan participant divorces. Some plans take this a step further and will also remove an ex-spouse when there is a legal separation.

In the article, IRS points out that the automatic removal of a spouse without spousal consent could cause a plan violation of the spousal death benefit rules. These rules state that a current spouse has certain entitlements to a death benefit in a qualified employer plan.

When a plan participant obtains a legal separation, they can change a beneficiary designation to a non-spouse beneficiary without obtaining a spousal waiver. However, the article states : “Although a legally separated participant can waive the spousal death benefit without spousal consent, a plan’s automatic revocation language, by itself, doesn’t satisfy the waiver rules.” This means that the separated spouse will remain the beneficiary of plan death benefits.

Plan participants should not rely on the plan language to determine the beneficiary of plan benefits. Beneficiary forms need to be updated whenever there is a significant life event such as a birth, death, adoption, divorce, or legal separation. The plan administrator is not going to monitor what is going on in a plan participant’s life and remind them to update their beneficiary forms. Make sure the money you worked so hard for is going to the beneficiaries that you choose.

- By Beverly DeVeny and Jared Trexler

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Spousal Waivers and IRAs

You are married and have an IRA. You know you need to name a beneficiary for those funds. But what if you do not want to name your spouse as the beneficiary? Are you required to name him or her? Under federal law, and IRAs are governed mostly by federal law, you are not required to name your spouse as your IRA beneficiary. You can name anyone you want as the beneficiary. They don’t even have to be a relative.

State law will have some impact here, though. If you live in a community property state, you will most likely need to have your spouse sign a waiver before you can name a non-spouse beneficiary for your IRA funds. In some states, you can “disinherit” your spouse by naming someone else on the beneficiary form, but the spouse could have the last laugh. Some states allow a disinherited spouse to make a right of election against the estate and the spouse would then end up with some of your assets. He or she could then laugh all the way to the bank.

In most employer plans, if you are married and want to name someone other than your spouse as the beneficiary of your plan benefits, you must have your spouse sign a waiver.

Be careful who signs the waiver. It must be a spouse. Documents signed by a fiancé, such as a pre-nuptial agreement, do not count. Once a spouse signs a waiver, update the beneficiary form. You should do both steps to ensure that your assets go to the beneficiaries that you select.

Divorce decrees also don’t count. A spouse can waive rights to retirement benefits in a divorce decree, but as long as a beneficiary form naming the spouse remains in place, that spouse - now the ex-spouse - will, in most cases, end up with the retirement benefits. Always update beneficiary forms after a divorce.

Beneficiary form reviews should be a key component of your financial plan, whether you are your own planner or you have a professional doing this for you. You can see how something that seems so simple can quickly become complicated.

-By Beverly DeVeny and Jared Trexler

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Beneficiary Form Review: The Gift That Keeps on Giving

For Valentine’s Day many of us gave or received tokens of love such as flowers, candy, jewelry, or a nice dinner in a restaurant. But now Valentine’s Day is over (much to Hallmark's chagrin). That makes this a good time to think about our beneficiaries. How much do we love them? Do you love your beneficiaries enough to take the time to check up on your beneficiary forms for your retirement accounts? You really should consider doing this because there are plenty of "un-loving" consequences if you don't.

Your Estate Inherits
This can happen when there is no beneficiary form on file or if you actually name your estate on the beneficiary form. Your retirement account now becomes a probate asset. It is subject to claims of creditors. Worse still, it could go to the wrong beneficiary. But even worse, your beneficiaries lose the ability to stretch out distributions over their own life expectancies. This is not a good way to show you love them!

The Wrong Beneficiary Inherits
This happens way too frequently. It happens when the beneficiary you have named on the beneficiary form dies before you do and you never update the form. It happens when there is a divorce and you never update the form. It happens when there is a remarriage and you never update the form. You get the picture. Your beneficiary forms need to be updated whenever there is a significant life event in your family, good or bad, such as a birth or an adoption.

The wrong beneficiary can also inherit when your other estate planning documents have not been updated. Do you have a trust named as the beneficiary of your retirement account? Do you still need that trust? How old is the trust? The estate tax rules have changed significantly in the last few years. Does that old trust still accomplish what you want it to?

Problems can be avoided or corrected by having contingent beneficiaries named on the beneficiary form along with the primary beneficiary. In the case of the premature death of the primary beneficiary, the contingent beneficiary will inherit the retirement plan at your death without you having to do anything. In the case of the wrong beneficiary inheriting, he or she could disclaim the account, and it would go to the contingent beneficiary. I actually know of cases where the beneficiary wanted to do this, but there was no contingent beneficiary in place to accomplish it.

So show your beneficiaries that you love them. Do a beneficiary review and ensure that they get the assets you want them to receive. Then give them a call or send an email. Maybe you can make a celebration out of your beneficiary review. Perhaps, we could even get Hallmark to carry cards for the occasion.

Article Highlights: 

• Think about beneficiary reviews now
• Make sure your assets go to the right beneficiaries
• If not -- the estate could inherit the account or it could go to the WRONG beneficiary

- By Beverly DeVeny and Jared Trexler

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Even President Obama and Governor Romney Can Agree On These 5 IRA Items

Did you see that debate last night? No matter what side of the aisle you happen to sit on - or even if you sit in the aisle itself - you have to admit that was a far more spirited and contentious debate than the last one. It seemed like President Obama and Governor Romney argued about everything. Not to mention there were a couple of times that I actually thought they were going to come to fisticuffs. With so much not to agree on, I began to wonder, is there anything they can agree on? So here's my take on 5 IRA items even President Obama and Governor Romney would have to agree on.

This article is just a sample of the information we will cover in our Election Week, running from October 22-26, so check back next week as we cover several important IRA, tax and retirement planning election issues.

1) The Earlier You Start, the Better Off You'll Be
Retirement savings isn't a sprint to the finish line, it's a marathon. Those who start younger and have the patience and stamina to continue with a solid plan over many years will typically fair the best. That's largely due to the power of compounding, the seemingly magical way money tends to increase on its own over time. Jim Croce once famously sang "If I could save time in a bottle." Well, if he could have actually found a way to do so, he might have been that generation's Bill Gates or Warren Buffet, because for many, time is the most valuable commodity there is.

2) Proper Beneficiary Forms are a Must
When a person dies with an IRA or other type of retirement account, their assets will typically pass to the beneficiaries of their choice by way of beneficiary form. That is, unless there is no beneficiary form or the beneficiary form, for some inexplicable (yet very common) reason, names their "estate" or "will" as a beneficiary. When a person is named as the beneficiary of an IRA on a beneficiary form, they inherit the account directly, without having to deal with the expense and time delay of probate (the legal process of administering an estate). Individuals are also generally able to stretch death distributions out over their life expectancy. In contrast, without a beneficiary form, the IRA will most likely have to go through probate and the stretch can be blown.

3) Having to Take RMDs When You Don't Need Them Stinks
"So let me get this straight…I am going to save and sacrifice over the years to put away money so my family and I can enjoy my golden years, I'm going to make sure I'm doing everything right and then, when I reach the absurdly ridiculous age marker of not 70, but 70 ½, you're going to force me to take my own money out of my own account and pay tax on it at whatever rate(s) you happen to have in place at that time?"

That doesn't seem very fair, but hey, that's the way it is. To make matters worse, there's really not much you can do about a required minimum distribution (RMD) once you have one. You can't roll your RMD over to another IRA or retirement account. You can't even put it in a Roth IRA, even though you have to pay the tax on it. Of course, if you want to get out of future RMDs, you could always convert the remainder of your IRAs to a Roth IRA, which would have no RMDs, but the conversion will be taxable

4) The IRA Rules are Complicated
Yeah, no surprise here. The Tax Code is riddled with complex and complicated rules, but when it comes to IRAs, sometimes it seems as though they are in a class of their own. What makes matters worse is that many people fail to recognize their immense complexity. At least when you know something is difficult, you seek help. I mean, have you ever heard of anyone trying to brush up on their open heart surgery skills so they can perform surgery (other than an actual heart-surgeon of course)? There's a reason we can teach 2-day long "introductory" classes with manuals of 400+ pages each and still run out of time and space. There's a lot to this area. In the end, most people would do better with a little extra input from someone who specializes in their area.

5) The Rules of the Game Change
As if it's not enough that the rules are complicated (item #4), the rules often change while you're still playing the game. Tax rates may increase or decrease, Congress may pass a new law, the IRS may issue new regulations, rulings and notices, and the economy and financial markets are about as predictable as what the weather will be like on this day in 5 years. You might even change the rules of the game yourself by getting married, having a child or some other sort of life event. Each time there is a major development in any one of these areas; you have to reevaluate your plan to see if, given the new rules, you're still on track for success.

Article Highlights

• Time is on your side in retirement planning
• Proper beneficiary forms are a MUST
• The rules of the "game" always change via a birth, death, marriage, divorce, so make sure you reevaluate your plan after a major development

- By Jeff Levine and Jared Trexler 

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Making Life Difficult For Your IRA Beneficiary

An IRA account owner is trying to keep things simple or just does not get around to changing a beneficiary form. Only one person ends up being named on the beneficiary form. The account owner exacts a promise from that person that they will make sure that the account is split between all the children, or all the grandchildren, or all the siblings or whoever is important to the account owner. The unwitting beneficiary agrees to this since, after all, it is only fair that the account be split.

Now the account owner has died and the beneficiary wants to do the right thing - split the account out the way the owner wanted it done. But there is just one problem. The inherited IRA cannot be assigned or gifted from the inheriting beneficiary to the other intended beneficiaries. Every penny the inheriting beneficiary takes out to give to an intended beneficiary is included in the inheriting beneficiary’s income, not the income of the intended beneficiary.

You also run up against the gifting rules. The inheriting beneficiary can only give up to $13,000 (in 2012) to any individual in the year. If he gives more than that, he has to file a gift tax return.

This may have kept things simple for the account owner, but it creates a nightmare for the inheriting beneficiary. If the account owner truly wants to keep things simple, then he or she should have a beneficiary form that names exactly who should inherit the asset and it should include the exact share they should inherit.

ARTICLE HIGHLIGHTS

• Name the exact individuals you want to inherit your IRA on the IRA beneficiary form
• IRAs cannot be transferred or assigned to beneficiaries who should have inherited but were not named
• The named beneficiary must pay all income taxes on distributions

- By Beverly DeVeny and Jared Trexler

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How Important Is Your Beneficiary Form? THIS Important!

Let's assume you have an IRA or retirement plan or annuity or even life insurance. All of those things have a beneficiary form. They do not pass through your will and they are not probate assets as long as you have completed or updated the beneficiary form. We say this over and over again. The reason we are repeating it is because there is a new court decision in a case where there was no beneficiary form for employer plan assets.

What happened? The spouse predeceased the plan participant. There was no contingent beneficiary named on the plan beneficiary form. The participant was survived by stepchildren and his siblings. The plan gave the funds to his siblings after determining that step children do not meet the plan's definition of children. The balance of his estate went to his stepchildren. (Editor's Note: We initially brought up this case in Tuesday's article on leaving retirement assets to your stepchildren. CLICK HERE to read that article).

When you have no beneficiary form or the beneficiaries you have named have predeceased you, then you have no say over where your retirement assets go. The documents - the IRA agreement, the plan agreement, the annuity contract, the insurance policy - will determine where your money goes, NOT you.

It is imperative that you complete beneficiary forms whenever you open one of these types of accounts. And take it one step further. Don’t just name a primary beneficiary. Also name a contingent beneficiary. It doesn’t cost you anything to do this. This way, if your primary beneficiary predeceases you, then your assets automatically go to the contingent beneficiary - without you having to do anything more. In our court case above, if the plan participant had put his stepchildren on the plan as contingent beneficiaries, they would have inherited the plan assets. No court case. No lawyer’s fees.

It also doesn’t hurt for you to check on your forms every couple of years. Companies have been known to “lose” them. I know mine did - they told me so. If they can’t find the form or if you need to update your beneficiaries, get a new form, fill it out, and send it in. Keep a copy of the form. And check back with the company to see if they actually received your form and processed it. Of course you only need to do this if you want your funds to go where you decide they should go. If you are OK with the company deciding for you, then you don’t have to do a thing. They will take care of it after your death.

- By Beverly DeVeny and Jared Trexler

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Leaving Retirement Money to Stepchildren

Many of you have stepchildren. It's perfectly fine to name stepchildren as the beneficiary of your retirement funds. However, care must be taken when naming them as the beneficiary.

In an employer plan, such as a 401(k) or pension plan, if you are married, you will need your spouse's consent to name someone other than your spouse as the plan beneficiary. This rule applies whether you want to name your natural, adopted, or stepchildren as the beneficiary.

In a recent court case, an employee died and under the terms of his employer's retirement plan, the funds went to his “children.” The plan administrator determined that his stepsons were not “children” and paid the funds out to another beneficiary. The court agreed with the plan administrator. In hindsight, the employee should have specifically named the stepchildren as his beneficiaries.

In an IRA, naming stepchildren or anyone as beneficiary is easier because spousal consent is generally not necessary. When filing out an IRA beneficiary form with a financial institution, ideally don’t write “my children” on that form. Instead, write their specific names on the form to avoid any confusion as to who you want to get your IRA money after you die.

Filling out a beneficiary form is a very important decision and care should be taken.

-By Joe Cicchinelli and Jared Trexler

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Using Your IRA to Take Care of Your Pet After You Die

The law allows you to leave money and property to a beneficiary after your death. Generally, the beneficiary must be a person or legal entity capable of accepting the property.

Individuals almost always name a beneficiary of their IRA who will inherit the funds after their death. Usually the IRA beneficiary is a person such as a spouse, child, or grandchild. But IRA owners can name a legal entity as their IRA beneficiary, such as a charity, estate, or trust.

If you are an IRA owner and have a pet and would like to have that pet taken care of, you cannot leave the pet your IRA directly because a pet is incapable of accepting the property. However, there are ways to make sure that your favorite pet is taken care after you die without leaving the pet any funds directly.

One way is to leave the IRA funds to your estate and then have language in your will that says the pet must be taken care of after your death. However, this approach has many pitfalls such as ensuring that the funds actually are used for your pet’s care. A better way might be to name a special trust known as a pet trust as the IRA beneficiary.

A pet trust is a trust governed by state law that holds cash or other property “in trust” for the benefit and care of your pet. Typically, the trust will remain open for the life of the pet, and the trustee of the trust ensures that the money is used for the pet’s care. An attorney knowledgeable in pet trusts should be consulted before naming a pet trust as the beneficiary of your IRA.

The biggest drawback to leaving your IRA assets to your pet, either through your will or through a trust, is that the IRA funds will be subject to accelerated taxation. It is also likely that they will be taxed at the highest income tax rates. It might be advisable to leave other assets to care for your pet whenever possible.

-By Joe Cicchinelli and Jared Trexler

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Desperate Housewives Star Passes Away; Leaves Behind Important Retirement Planning Lesson

Kathryn Joosten passed away from lung cancer at the age of 72 last Friday. That name may not sound familiar to everyone, but fans of the hit TV show Desperate Housewives will recognize Joosten as the actress who played Karen McCluckey. And fans of retirement accounts will remember Kathryn for a slightly different reason. What in the world could an actress on Desperate Housewives have to do with retirement accounts? Funny “you” should ask.

A number of years ago, Joosten’s character on Desperate Housewives, McCluskey, ran into a little problem that anyone with a retirement account should pay close attention to these days. The plot was essentially as follows; Joosten’s character had the unfortunate occurrence of discovering her husband had passed away. However, since it was the middle of the night, her character decided it would be best to wait until the morning to notify the appropriate authorities. But after making such a disheartening discovery, one would hardly be in a mood to sleep, right? So what did Joosten’s character do? She decided to get a head start on going through the massive amount of paperwork she was likely to face.

And then, IT happened. While going through her now deceased husband’s paperwork, she discovered the beneficiary form for her husband’s retirement plan… and lo and behold, she was not the beneficiary. Who was it? Only the worst possible person from her point of view of course, none other than his ex-wife! (Here is another example of an outdated beneficiary form proving costly.)

This, of course, left Joosten’s character with a big problem. She needed the retirement money to live on, but if she reported her husband as deceased, those payments weren’t going to be hers anymore. So what did she do? The only thing she could. She stuck her husband’s body in the freezer and went right on cashing his checks as normal! Until, that is, the ruse she was running was discovered.

Now this may only be fiction, but most fiction is based, in part, on some sort of truth. The beneficiary form is the single most important document there is when it comes to your retirement accounts. It determines who will get your retirement accounts when you are no longer here - not your will - and, because it makes a difference in whether or not beneficiaries get the “stretch,” it determines, in part, how much the account is even worth.

If you make a mistake, it’s unlikely your beneficiaries are going to stuff you in the freezer and go on like nothing happened, but like Joosten’s character, they too may be left without the funds they were truly counting on. So, in a statement I’d never really expect to make… take a retirement planning tip from this Desperate Housewives episode and make sure to double check your beneficiary forms today.

Rest in Peace Kathryn Joosten, and thanks for the laughs.

-By Jeffrey Levine and Jared Trexler

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Building Your Child's or Granchild's IRA

We have previously written about a "lack of financial literacy," indicating that many individuals don't know or understand the benefits of IRAs or saving for retirement.

One of the best ways you can help your children or grandchildren learn about investing for their future is to share your own experience. You know the value of a good retirement nest egg (especially if you are reading this website each day), but kids just don’t think of those things. You probably didn’t either when you were younger.  By sharing your experience, by having your child or grandchild start saving early, and by making it fun, they will see the value. (Editor's Note: Ed Slott's new book, Fund Your Future, talks about just this and provides a detailed plan to get you there. You can pre-order the book here).

You can begin by telling your children about the value of preparing for retirement by making wise investments through a traditional or Roth IRA. A Roth IRA is particularly well-suited for younger individuals. Children or grandchildren are not interested in, or need, an income tax deduction for a contribution to an IRA. A Roth IRA has the ability to grow over the years on a tax-free basis rather than tax-deferred basis.

As your children or grandchildren mature and are able to understand some of the basics of investing, explain what you have done to grow your own IRA wealth. Your flourishing retirement account may be the best means of teaching your kids the value of smart investing and spurring them to build their own nest egg.

An IRA contribution must be based on the taxable compensation (earned income) of the individual for the year of the contribution. Compensation is income received for personal services rendered. Passive income, such as income from investments, is not considered for the purpose of making an IRA contribution. You can use this chart to see the 2012 IRA contribution limits.


If your child or grandchild has a paper route or another part-time job, that money can be claimed as earned income. In these cases, you can even make monetary gifts to them, up to the amount they have earned during the year, to help them fund their IRAs. Then, for each one, using their Social Security number, open an IRA in their name, designate an appropriate beneficiary, and start watching it grow. Yes, they may be young, but each IRA owner should always have a beneficiary. Follow this beneficiary form checklist.

The maximum contribution for 2012 is $5,000 assuming they earned that much or more. Not every IRA custodian will establish an IRA for a minor, so you may have to do a little leg work to find one. You and your progeny will be glad you did.

- By Marvin Rotenberg and Jared Trexler

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Dead Man's Outdated Beneficiary Form Proves Costly

We have discussed the importance of an IRA beneficiary form at length. You should always know where a copy is for yourself and make sure your financial advisory team has a copy on hand as well. Also, you must make sure the beneficiary form is current to reflect your financial wishes (who is getting what).

The IRA beneficiary form does NOT just change on its own. You need to update it after life events (birth, death, marriage, re-marriage, etc.). This article from Forbes is just another in a long line of horror stories we hear all of the time. In this case, a man didn't update his beneficiary form, and over $1 million of financial assets went to his ex-wife.

Stories like this are avoidable with proper planning. Read this article and share its message with friends, family and clients. And when finished, make sure you have your updated beneficiary form in a safe place.

http://www.forbes.com/sites/feeonlyplanner/2012/02/21/dead-mans-outdated-beneficiary-documents-gave-1-million-to-ex-wife/

-By Jared Trexler

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Ed Slott's Webcast: 5 Biggest Stretch IRA Mistakes

Ed Slott's FREE Webcast, The 5 Biggest Stretch IRA Mistakes, is now streaming at www.IRAhelp.com through March 23. You can register and listen immediately to the 5 missteps that trigger huge taxes and destroy inherited IRAs. The STRETCH IRA is one of biggest (if not the biggest) benefit in the tax code, so make sure you learn the steps necessary to preserve a financial legacy with this 20-minute webcast.

Click Here to register or go to www.IRAhelp.com for more information.

- By Jared Trexler

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Beneficiary Issues for the Sandwich Generation

The "sandwich" generation is those who are raising their children and also taking care of their parents. They are sandwiched by their care-taking responsibilities. They are likely to have their own 401(k)s or other employer plans and IRAs, and they are likely to be the beneficiaries of their parent’s retirement assets. Again, they are sandwiched - they are owners with beneficiaries and they are also beneficiaries. Here is what these caretakers need to know about both sides of the equation.

First and foremost, they need to be sure there are beneficiary forms for all retirement assets, both the ones their parents have and for their own assets. They need to make sure that Mom and Dad’s assets have living beneficiaries named and that they do not go through the estate. Retirement assets should never go through an estate. That means they have to go through probate and they could be subject to claims of creditors. Trusts can be problematic and you should talk to an advisor with expertise in distributing retirement assets if you want to name a trust as a beneficiary. On the other hand, for the caretaker’s own assets, a trust may be necessary if their retirement assets are being left to minor children. Minors cannot sign the necessary documents to establish an inherited IRA, they cannot request required distributions and they cannot make investment decisions. Without a trust, or a guardian, a court may need to become involved to determine who is going to manage the assets for the minor.

Divorce rates are rising for those over age 50 and marriage is becoming a thing of the past for younger couples. Again, beneficiary forms are critical in these circumstances. If parents get divorced, the caretaker needs to be sure that the parents update their forms to reflect their new circumstances. If the caretaker gets divorced or never married in the first place, the beneficiary form will ensure that retirement assets are left to the individual they choose. That could be the individual responsible for raising any children or it could be to the children of a previous relationship. In either situation, you generally do not want retirement assets going to ex-spouses in addition to whatever they got during the divorce or the break-up of a relationship.

The beneficiary form is like the will for the retirement assets. You worked hard for that money. Make sure it goes where you want it to go - not where the company, or the courts, or state law says it should go. If the assets are going to minors, make sure there will be a smooth transition.

- By Beverly DeVeny and Jared Trexler

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Holidays Are Great Time to Remember Family, Friends, Beneficiary Forms

Last week we talked about the ability for certain airline employees to roll over certain payments to a Roth IRA - a planning strategy that can make a huge difference in retirement preparation, but only for a relatively small percentage of retirement account owners. Today, we switch gears entirely to something that applies to every retirement account owner… the beneficiary form.

If you’ve spent any time reading through the various articles posted here at The Slott Report, reading any of our books or watching any of our Public Television specials, then you are probably aware that the beneficiary form is the single most important document when it comes to IRAs and other retirement accounts. Despite its importance though, few people take the time to actually check the form and make the necessary updates. Remember, knowing and doing are two very different things.

We’re now coming into the holiday season, a time when we are most likely to be surrounded by our family members and those near and dear to our hearts. So when you sit down to your big Thanksgiving feast, to Christmas dinner or to whatever holiday you happen to be celebrating, take a good look around. Think about it, don’t you want these people to benefit as much as possible from your hard work and sacrifice when you are no longer here? I thought so.

So how can you be sure that’s the case? It’s really not that difficult. First and foremost, check your beneficiary forms. ALL of them. Look at your IRAs, Roth IRAs 401(k)s, 403(b)s, non-qualified annuities, life insurance policies… anything and everything that has a beneficiary form. Remember, when an asset passes by way of beneficiary form, that form will trump (supersede) your will. If you actually undertake this exercise, you might be surprised at what you see.

You might find yourself repeating Haley Joel Osment’s famous line from The Sixth Sense, “I see dead people.” Other common “bad” beneficiaries include ex-spouses and parents that were named as beneficiaries on accounts before marriage. Not that you can’t name an ex-spouse as a beneficiary after a split or continue to keep a parent as your beneficiary after getting married - it’s just that more often than not, when these types of beneficiaries inherit retirement accounts, it’s because the owner neglected to update their beneficiary form rather than stemming from a current desire on the owner’s part.

Thankfully though, if you do need to change your beneficiaries (or if you can’t find the form to figure out who they are), the fix is easy. Just contact your financial advisor or account custodian and request a blank beneficiary form. Then simply fill it out, send it back, and follow-up to make sure it was received and processed properly. Voila! Problem solved. If you really want to be extra secure, you can take it one step further. About a week or two after submitting your beneficiary forms, send a letter to your custodian asking them to notify you of the current beneficiaries on file. Then, once you receive a response, you’ll have confirmation of your current beneficiaries on their letterhead - and that’s as good as it gets.

-By Jeffrey Levine and Jared Trexler

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