Unfortunately, accidents can happen. Since benefits in a retirement plan do not need to go through probate if the participant has designated a beneficiary for the plan, we highly recommend that all participants who have a benefit in a retirement plan designate beneficiaries for their account.

A participant can designate both primary and contingent beneficiaries. Primary beneficiaries will receive the benefit if the participant dies, but if the primary beneficiary dies before the participant, then the contingent beneficiary will receive the benefit.

Spouses have rights to a participant’s account. If a participant is married and they do not designate a beneficiary, their current spouse is automatically their beneficiary under most plan documents. If a participant changes marital status and does not update their beneficiary form on file, the new spouse automatically becomes the beneficiary regardless of what the completed form indicates.

What if a participant is married and wants to have a beneficiary other than their spouse? In this case, the participant needs to complete a form to indicate their designated beneficiary, and the spouse must then agree to waive their benefit. To be valid, the spouse’s signature must be notarized.

Your Plan Consultant at Noble-Davis can help you obtain a listing of participants who do not have beneficiaries on file. We recommend that you review this information with your employees every 3-5 years to make sure their information is up-to-date.