For retirement savers, adding a beneficiary to your 401(k) plan should be a top priority. A 401(k) plan beneficiary is the person or entity, such as a charity or trust, who inherits your 401(k) after your death. If a beneficiary isn’t named and the account holder dies, the 401(k) plan will likely end up in probate court to decide who receives the funds.
The primary problem is that 401(k) plan holders may not realize the importance of naming a beneficiary. More commonly, a plan holder may believe that naming a recipient in their will is sufficient, but that’s not the case.
“It’s a complicated process, much more than simply providing your will to the 401(k) company and receiving your distribution,” said Adam D’Acierno, founding partner at Strategic Capital in Austin, Texas, in an email.
