Employment: Annual Enrollment Ideal Time to Update Beneficiary Designations
Open enrollment is an excellent time to remind your employees to update their beneficiary designations on their employee benefit plans-401(k), life insurance, FSA/Medical accounts, whatever you have that may distribute money at an employee's death.
Here's a suggested note:
Are your [401(k), life insurance, etc.] beneficiary designations up to date? What is on file determines who gets the money, if you should pass away. It is surprising how often these are out of date, resulting in unintended consequences. Ex-spouses still listed, family members unintentionally omitted (or now deceased), no contingent beneficiaries listed and the primary beneficiary is deceased, etc. Please take a moment to ensure that your beneficiary designation forms are as you intend them.
For many employees, these plans may provide the majority of their estate, and the money may wind up going to the wrong person or even be available to creditors to satisfy credit card debts, medical bills and other claims, instead of directly to family or friends, as the employee decides.
Having proper beneficiary designations also helps employers. It allows employers to know how to pay out certain benefits, as opposed to waiting for the family to file a probate action with the courts.
By Harry V. Rouse, email@example.com