A beneficiary is a default beneficiary when the retirement account owner either fails to name a beneficiary for his/her retirement account, or is predeceased by the named beneficiary(ies) and (a) there is no contingent beneficiary and/or (b) no replacement beneficiary is named.
Many plan documents provide for a succession of default beneficiaries, in the event the first line of default beneficiary does not survive the retirement account owner. For example:
oThe spouse is the beneficiary;
oIf there is no surviving spouse, the surviving children is the beneficiary-Per Stirpes or Per Capita;
oIf there is no surviving spouse or surviving children, the estate of the retirement account owner is the beneficiary.
Some default lines go from spouse directly to estate. Others go directly to the estate; however, this usually is not the case with qualified plans and ERISA 403(b) plans, as the spouse is almost always included in the default line.
Definition Also known as the Saver’s Tax Credit: Nonrefundable tax credit available to eligible individuals who make contributions to their retirement account. The saver’s credit
The Retirement Dictionary was created to provide IRAs and employer retirement plan information in an easy-to-understand manner for individuals at all levels of expertise and to help educate everyone about how retirement plans work.