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February 18, 2009

What is a contingent beneficiary? Find out here!

Your Guide

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Beneficiary

Definition

The party that the retirement account owner has identified on the beneficiary form that will inherit the retirement assets remaining in the retirement account after the owner’s death. Retirement plan service providers or plan administrators usually provide a ‘fill-in-the-blanks’ form that retirement account owners can use to designate a beneficiary. However, some will accept customized beneficiary designation forms instead. Retirement account owners who are interested in using a customized beneficiary designation form should consult with the plan administrator or IRA custodian/trustee to determine if they will allow the use of those forms, and whether there are any specific requirements that should be satisfied in order for the form to be ‘acceptable’.

Referring Cite

The retirement plan kit, summary plan description, beneficiary form

Additional Helpful Information

Failure to designate a beneficiary may result in the beneficiary being determined under the retirement plan’s default beneficiary provision.

Retirement account owners usually have the option of designating primary beneficiaries and contingent beneficiaries. Contingent beneficiaries would inherit the assets only if the primary beneficiary(ies) predeceases the retirement account owner.

For qualified plans and ERISA 403(b) accounts, the spouse of a married participant must be the sole primary beneficiary, unless the spouse consent’s in writing for someone else to be designated as a primary beneficiary. For IRAs, spousal consent may also be required if the IRA owner lives in a community or marital property state.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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