Your think you are the beneficiary? Think again, maybe you are not.

Posted by Nancy Hecht, CFP®, AIF®

I am not a fan of leaving money with a company that you no longer work for.  You might be surprised as to how many former employees actually do this.  Here is another reason you may want to rollover that account to an IRA.

In 1984, President Reagan signed in law the rule that proclaims, “no longer will one member of a married couple be able to sign away survivor benefits for the other.”  This protection for surviving spouses can negate named beneficiaries in a corporate plan.  Here is an example:

A husband has a 401(k) and the wife passes away.  The husband now names his children as primary beneficiaries.  A few years later he re-marries but keeps his kids as primary beneficiaries on his plan.  Sadly, he soon passes away.  Under the 1984 law, the second spouse can now claim as the full and sole beneficiary on the 401(k), disinheriting the children.

Please, keep your planning current so you can make sure that the beneficiary you name will inherit as you wish.

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