A walkthrough of every account type that carries beneficiary designations, how to review and update them, and the life events that should trigger an immediate review.
Federal law (ERISA) requires your spouse to be the primary beneficiary on your 401(k) unless they sign a written waiver. If you're divorced and haven't updated, your ex-spouse may still inherit. Log into your plan portal or call HR to verify.
Verify IRA and Roth IRA beneficiary designations
Unlike 401(k) plans, IRAs have no federal spousal requirement (though some states have community property rules). Name both a primary and contingent beneficiary. If no beneficiary is named, the IRA goes through your estate, losing the stretch distribution option.
Update pension and deferred compensation plan beneficiaries
Pension survivor benefits and deferred compensation plans each have separate beneficiary forms. Some pensions offer a joint-and-survivor annuity that pays your spouse after death. Contact your HR department for all plan-specific beneficiary forms.
Review HSA (Health Savings Account) beneficiary
If your spouse is the HSA beneficiary, the account becomes their HSA at your death with no tax consequences. A non-spouse beneficiary receives the fair market value as taxable income. Many people set up HSAs and never designate a beneficiary.
Review Life Insurance Beneficiaries
Update beneficiaries on employer-provided group life insurance
Group life insurance typically provides 1-2x your annual salary. Many employees complete the beneficiary form at hiring and never update it. Check with HR annually, especially after marriage, divorce, or the birth of a child.
Verify beneficiaries on individual life insurance policies
Contact your insurance company or agent to confirm current beneficiaries. Life insurance proceeds go directly to the named beneficiary, bypassing probate and typically arriving within 2-4 weeks of a claim. Name both primary and contingent beneficiaries.
Confirm per stirpes vs per capita distribution preference
Per stirpes means if a beneficiary dies before you, their share passes to their children. Per capita divides equally among surviving beneficiaries only. For example, if you name your 3 children per stirpes and one dies, that child's kids get their parent's share.
Review Bank and Brokerage Designations
Add or update payable-on-death (POD) designations on bank accounts
A POD designation transfers bank accounts to your named beneficiary at death without probate. Walk into your bank and ask to add a POD beneficiary. It takes 10-15 minutes and costs nothing. The beneficiary has zero access while you're alive.
Set up transfer-on-death (TOD) on brokerage and investment accounts
A TOD registration works like POD for investment accounts. Contact your brokerage to add this designation. Without it, securities go through probate and may be frozen for 6-12 months while the estate is administered.
Review any joint account titling and right of survivorship
Joint accounts with right of survivorship pass automatically to the surviving owner at death. However, joint accounts give the other person full access during your lifetime. Adding a child to a bank account is not the same as a POD and creates gift tax and creditor exposure risks.
Review Annuity and Social Security Designations
Verify beneficiary on any annuity contracts
Annuity beneficiary rules vary by contract type. A surviving spouse can continue an annuity and defer taxes. Non-spouse beneficiaries typically must take a lump sum or 5-year payout, which triggers immediate income tax. Review the contract terms before updating.
Check Social Security survivor benefit eligibility
A surviving spouse can receive 100% of your Social Security benefit starting at their full retirement age, or a reduced amount starting at age 60. Dependent children under 18 also qualify for survivor benefits equal to 75% of your benefit amount.
Review any military or government pension survivor designations
Federal employees under FERS and military members under the Survivor Benefit Plan have separate beneficiary elections that affect monthly survivor annuities. These elections are often made at retirement and can be costly to change. Verify current elections with your benefits office.
Coordinate Beneficiaries with Estate Plan
Ensure beneficiary designations align with your will and trust
Beneficiary designations on accounts override your will. If your will leaves everything to your spouse but your IRA names your sibling, the sibling gets the IRA. Review all designations alongside your estate plan every time you update either one.
Decide whether to name your trust as beneficiary on any accounts
Naming a trust as IRA beneficiary allows more control over distributions but may trigger faster required minimum distributions under the SECURE Act. Non-eligible designated beneficiaries must deplete inherited IRAs within 10 years. Consult an estate attorney before naming a trust.
Avoid naming your estate as beneficiary
Naming your estate as beneficiary subjects the account to probate, creditor claims, and potentially unfavorable tax treatment. Retirement accounts that pass through an estate lose the 10-year stretch option and may need to be distributed within 5 years.
Set Review Triggers
Update all beneficiaries after marriage or divorce
Getting married does not automatically add your new spouse to existing accounts. Getting divorced does not automatically remove your ex. In some states, divorce revokes a beneficiary designation by law, but in others it does not. Update every account manually within 30 days.
Review beneficiaries after a birth, adoption, or death in the family
A new child needs to be added as a beneficiary or contingent beneficiary across all relevant accounts. If a named beneficiary dies, the account may default to your estate if no contingent beneficiary is listed. Update within 60 days of any family change.
Schedule an annual beneficiary audit across all accounts
Set a calendar reminder each year (like your birthday or tax season) to review every beneficiary designation. Create a spreadsheet listing each account, institution, primary beneficiary, contingent beneficiary, and last reviewed date.
Keep a master list of all accounts with beneficiary designations
Store a summary document listing every account that has a beneficiary designation, along with the institution name, account type, and named beneficiaries. Share this with your executor or estate attorney. This document saves families hours of searching after a death.
Frequently Asked Questions
How often should I review my beneficiary designations?
Review all beneficiary designations annually during your financial checkup and immediately after any major life event: marriage, divorce, birth of a child, death of a named beneficiary, or significant change in estate plan. Outdated designations are one of the most common and costly estate planning oversights. A divorced person who forgets to update a $500,000 life insurance beneficiary will legally leave that money to their ex-spouse regardless of what the will states.
What accounts have beneficiary designations?
All retirement accounts (401k, IRA, 403b, pension), life insurance policies, annuities, bank accounts with POD (payable on death) designations, brokerage accounts with TOD (transfer on death) designations, and HSAs. Social Security has its own survivor benefit rules rather than a beneficiary designation. These designations bypass probate and override your will, making them critically important to keep current.
Can I name a minor child as a beneficiary?
Technically yes, but it creates serious problems. Minors cannot legally receive assets directly, so a court must appoint a custodian (which you do not control), and the child receives the full amount at age 18 or 21 depending on state law. Instead, name a trust as beneficiary with the child as trust beneficiary, allowing the trustee to manage distributions until the age you specify (often 25-30). Setting up such a trust costs $1,500-$3,000.
What is the difference between primary and contingent beneficiaries?
The primary beneficiary receives assets first. The contingent (secondary) beneficiary inherits only if all primary beneficiaries predecease you or disclaim the inheritance. Without a contingent beneficiary, if your primary beneficiary dies before you, the asset goes through probate despite having a designation. Always name both primary and contingent beneficiaries on every account, and consider per stirpes designation so a deceased beneficiary's share passes to their children.