Do You Know Who Your Beneficiaries Are?

[kaneohe]

............for IRAs and Company Retirement Plans.............Note that is a different question than Do You Think You Know Who Your Beneficiaries Are?
The difference is that the former (Know) is the official list kept by banks or companies and the latter is your list.

Yesterday I got 6 e-mails from Fidelity telling me that I didn't have a beneficiary for my 401K plan. It was confusing because they also had a life insurance plan and another retirement plan and each e-mail seemed to differ as to whether I had beneficiaries for those other plans. Later (some hours later) another e-mail came saying to forget it........they had sent out those other e-mails by mistake.

In the meantime I had been probing the situation w/ Fidelity and after checking w/ rep#1 who thought he knew everything but actually knew nothing, I called back and got transferred to another rep who seemed more knowledgeable. She told me that my 401K didn't have beneficiaries but my DW's did. Although my plan had beneficiaries (confirmed) some yrs back , our group got transferred to a spinoff and although the 401K plan $$ got transferred, the beneficiary list didn't. DW stayed at the same employer and didn't have that issue.

There are other company plans that changed custodians so confirmation is needed. IRAs are in the same boat. Some were confirmed (in the past) with written acknowledgement. Some are questionable.....one bank lists the Roth IRA beneficiaries correctly w/ primary on one line, contingent on another line with appropriate labeling. The same bank lists TIRA beneficiaries separated but on the same line so it is not clear whether they consider them both primary or primary/contingent. Others I kept copies of the form I filled in but never asked for written confirmation.

Before this whole episode I was pretty confident that things were in order.
Now I'm not so sure..........I have come to appreciate VG as a custodian.
At least for company plans they seem to put the benefiaries clearly on every
quarterly statement. I need to get the rest of the world to follow in their
tracks.

[Brat]

Honest, VG's beneficiary options are very limited. Arrange a meeting with your Fidelity representative and review your beneficiary designations. You may need to have some signatures notorized. We took care of ours before the coronavirus19 was on the redair so the process may have changed.

[Sunset]

I have a bank, and they do not show the beneficiaries on the statement, nor in my Account.
I have to phone, and then they tell me.
For all I know, after I get off the phone, the rep changes it to his brother

[statsman]

Quote:

Originally Posted by Sunset I have a bank, and they do not show the beneficiaries on the statement, nor in my Account. I have to phone, and then they tell me. For all I know, after I get off the phone, the rep changes it to his brother

Put the bank accounts under a trust. Specify the beneficiaries in the trust. Only way to be certain, it would seem.

[Montecfo]

At E-Trade it is easy to check and change them online. I KNOW who they are but never hurts to check.

The CDs I have at banks could be another matter. Same with HSA.

[racy]

Yes, both primary and secondary. And they are all spelled out on my investments summary page so I don't forget!

[JustCurious]

Quote:

Originally Posted by Sunset I have a bank, and they do not show the beneficiaries on the statement, nor in my Account. I have to phone, and then they tell me.

That would be a dealbreaker for me, I would change banks for that reason alone.

[OldShooter]

We just do what our estate planning attorney tells us to do. For my IRA the beneficiary is DW and the contingent beneficiary is my rev trust. Why? I have no idea.

At Schwab, there is a "Beneficiaries" tab on the account "Service" page that tells all. You can change beneficiaries there, too. So if you're at Schwab you can easily answer @kaneohe's question.

[MarieIG]

Spouse primary/ kiddos contingency.

[CaliKid]

Quote:

Originally Posted by statsman Put the bank accounts under a trust. Specify the beneficiaries in the trust. Only way to be certain, it would seem.

I agree with this. Trusts are much more solid.

Problem with bank POA and beneficiaries is they lose/confuse them A LOT. I am not sure how in this computer world it happens but it really does. I have a case right now where a major financial institution has changed their mind 3 times on who the beneficiary is. Luckily it's a small amount of money so it's not going to a major problem. The lack of good record keeping is astounding to me.

[ShokWaveRider]

We do, as Credit Unions (Ours at least) add $250k NCUA insurance for every additional Beneficiary up to $1.25m.

[sengsational]

It seems perfectly clear on the Fidelity and Vanguard sites. Maybe I'll print the pages, though...I haven't done that.

[JoeWras]

WOAH!

I read this thread title and patted myself on the back. "Joe, of course you have beneficiaries all documented."

As I moved onto the next thread, a lightning bolt hit me. Wait. I opened an HSA with Fidelity last winter and moved it from my other administrator. I don't recall ever doing anything about beneficiaries.

I log on, and sure enough it is barren. Nothing. Nichts. Nada.

I took the time to check my 401k's held at Fidelity, and they were fine. But I had to do the dance one more time for the HSA. Did it online.

Thanks for the wake up call.

[The Cosmic Avenger]

I got the same email from Fido, and ALL of my accounts have TOD/POD beneficiaries, including my 401(k).

[armor99]

Just a word on why listing the beneficiaries on your retirement accounts is SO important.

Recently I got my trust set up, and the lawyer explained to me the from the legal viewpoint, what is written in for the beneficiary on retirement accounts superceedes ANYTHING else. Trusts, wills, whatever...

So for example if you are divorced, get a new will or trust written but forget about changing the name on you 401k account from your ex to your new wife or trust, then on your death your ex WILL get your entire 401k account. From what he said there is NO way out of that unless the ex were to sign some sort of document... and let’s face it... most would never be that altruistic...

It was eye opening learning about that...

[steelyman]

I’m nowhere near an expert but I do recall reading a book by Ed Slott that strongly advised against naming a trust as a beneficiary on an IRA. As I recall, the reason was that the stretch option would be lost. However, with the recent changes from the SECURE act that advice may not be as relevant (I think? Corrections welcome).

[Souschef]

One thing to look out for the phrase per stirpes. That takes the inheritance down the family line. Google it for complete definitions

[Montecfo]

There is a lot of good estate planning effected via well conceived beneficiary designations. Your will is for everything ELSE.

[OldShooter]

Quote:

Originally Posted by steelyman I’m nowhere near an expert but I do recall reading a book by Ed Slott that strongly advised against naming a trust as a beneficiary on an IRA. As I recall, the reason was that the stretch option would be lost. However, with the recent changes from the SECURE act that advice may not be as relevant (I think? Corrections welcome).

This is why estates and trusts are not DIY. Mistakes are not found until it is too late to correct them and the "right" strategy is a moving target.

We just redid our estate plan to reflect the new rules. In our case, most of our net worth is in IRAs and Roths. Most of it will go into trusts for grandkids and DS, so the trusts have to be the account benicficiaries. Re taxes, income that the trust receives but is not distributed is taxed at the high trust rate (35% IIRC), so we expect that the trusts will take the required distributions within the ten year requirement and will distribute the money in the year received -- avoiding trust-level taxes. The trust then closes at the ten year point. For one grandchild's special needs trust we expect that the trustee will want to have it last longer than 10 years, so that one gets the Roths. Then the trustee can take and hold/not distribute the Roth distributions within the 10 year requirement but there is nothing to tax.

Edit to clarify:Our rev trusts are the beneficiaries of the IRAs; they then fund the irrev trusts after both our deaths. The purpose of the irrev trusts is to protect the inheritance from going directly into the hands of people who are not equipped to manage it and to protect it from untoward events like judgments, divorces, slick salespeople, etc.

[Rianne]

Quote:

Originally Posted by steelyman I’m nowhere near an expert but I do recall reading a book by Ed Slott that strongly advised against naming a trust as a beneficiary on an IRA. As I recall, the reason was that the stretch option would be lost. However, with the recent changes from the SECURE act that advice may not be as relevant (I think? Corrections welcome).

Yes, we have a living trust but for the tIRA we had to list the beneficiaries separately with VG. Our problem is EE Bonds and I Bonds. Hopefully we’ll cash those out before we die. They’re paper bonds in a lock box > $120K. They’ll go to probate.