Choosing Your Account Beneficiary — Errors can be Costly to your Heirs

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Proper designation and regular review of your retirement account beneficiaries are essential to ensuring that what remains in your account(s) after you pass away goes exactly where you wanted. Improper designation or failure to update account beneficiaries can lead to unnecessary delays, taxes, legal battles or the money simply not going where you intended.

The basics

Always designate both primary and contingent (secondary) beneficiaries. Primary beneficiaries are the first in line to receive your account assets. Contingent beneficiaries will receive your assets if your primary beneficiary(ies) die before you do. If you have multiple beneficiaries, then you should also designate the percentage each beneficiary is to receive.

Designating your spouse

For 401(k) and other plans subject to the Employee Retirement Income Security Act (ERISA), a spouse is the automatic sole beneficiary of your account unless your spouse waives his/her right in writing. For IRAs, non-ERISA 403(b) plans and other retirement plans not subject to ERISA, you may name anyone you wish as your account beneficiary. However, if you live in a community property state, your spouse has a right to 50 percent of the account assets that were accumulated during your marriage.

Designating your children

When designating your children, it’s especially important to list them by name and include their Social Security numbers. Keep in mind that if you become divorced, the assets may end up in the hands of the minor child’s guardian, which may be your former spouse. In this instance, you may want to name a trustee or custodian rather than the minor child.

Keep a list

Keep an updated list of your beneficiaries that will be available to your family members or attorney upon your death. By law, plan administrators, custodians and insurers cannot disclose the names of your account beneficiaries to anyone except you or your beneficiaries and are under no obligation to contact your beneficiaries.

Reviewing your beneficiaries

You should review your beneficiaries on a periodic basis and adjust as needed. Life events such as marriage, divorce, childbirth or the death of a designated beneficiary can all warrant a change.

Provided by Ed Wettig, CFP, Cornerstone Financial Planning Group, which offers investment management, financial planning and retirement income strategies. Representative is registered with and offers only securities and advisory services through PlanMember Securities Corporation, a registered broker/dealer, investment advisor and member FINRA/SIPC. 6187 Carpinteria Ave, Carpinteria, CA 93013, 800-874-6910. Cornerstone Financial Planning Group and PlanMember Securities Corporation are independently owned and operated. PlanMember is not responsible or liable for ancillary products or services offered by Cornerstone Financial Planning Group or this representative.

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Ed Wettig, CFP — Cornerstone Financial Planning Group

Cornerstone Financial Planning Group offers investment management, financial planning and retirement income strategies. Representative is registered with and offers only securities and advisory services through PlanMember Securities Corporation, a registered broker/dealer, investment advisor and member FINRA/SIPC. 6187 Carpinteria Ave, Carpinteria, CA 93013, 800-874-6910. Cornerstone Financial Planning Group and PlanMember Securities Corporation are independently owned and operated. PlanMember is not responsible or liable for ancillary products or services offered by Cornerstone Financial Planning Group or this representative. cornerstonefinancialbend.com

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