Let's talk retirement Q&A

Q:

When I joined my employer’s retirement plan, I named a beneficiary to receive my retirement plan assets. Recently, I’ve decided that I want to choose someone else as the beneficiary. Is it possible for me to change my designated beneficiary and if so, how do I go about doing it?

A:

Yes, it’s possible to change the beneficiary of your retirement plan account from your original choice. It’s also a good idea to periodically review your beneficiary designations to see if changes are necessary. The account assets would pass to the individual(s) you name if you die before you retire. If you have recently had any major life changes such as marriage, divorce or the birth or death of a loved one, you may decide that you want to change your original designation. However, there are some legal restrictions and financial issues to consider before you change your beneficiary.
If you’re married, most 401(k) plans and other defined contribution plans generally state that your benefits automatically be paid to your surviving spouse upon your death. If you choose someone else as the beneficiary, your spouse must consent by signing a waiver, witnessed by a notary or plan representative.
If you name your children as beneficiaries and they are minors, you may need to take extra steps. Most plans won’t distribute assets directly to minors, so a court would have to appoint a trustee or guardian to receive the assets. To help avoid legal delays, you could name a trust for your children as the beneficiary of your account. Be aware that a trust would have to meet stringent IRS requirements to qualify as a designated beneficiary, so make sure you talk to a financial professional beforehand.
If you’re not married, you can generally name anyone, including your parents or siblings, as beneficiaries. If you subsequently get married, you can change the designation.
Generally, a will doesn’t affect how retirement plan assets are distributed. Your designated beneficiary automatically receives the retirement plan benefits even if your will states someone else should inherit all your assets.