Beneficiary Designation Forms

This is a reminder to clients of the importance of executing designated beneficiary forms for your retirement plan accounts.    If no designated beneficiary form is executed, the plan administrator will determine who receives the death benefit based on the plan document, which often names the spouse, or, if none, then the estate of the participant as the beneficiary.     Often these are not the best choices for the individual participant.  

Once executed, beneficiary designations should be reviewed every couple of years, particularly after life changing events such as marriage, divorce, or the birth or death of a family member.  Failure to do so can be catastrophic.  For example, in Kennedy v. Dupont, a 2009 U.S. Supreme Court case, a participant selected his wife as the sole designated beneficiary of his retirement plan account.   The couple divorced and the spouse waived her right to the retirement benefits under the divorce decree.  The participant later passed away, but never changed the designated beneficiary form.  The Supreme Court found that the ex-spouse had the right to receive the death benefit from the participant’s account despite her waiver.    

If you would like help regarding the tax and other consequences of choosing a designated beneficiary, please contact Joe Nagel at (404) 255-7400 ext. 16.