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401(k) Beneficiary Designation

401(k) Beneficiary Designation

 

Including Heaven’s Family as a Beneficiary in Your 401(k)

by David Warnock

Q: During my working years I saved money in a 401(k) to supplement my social security income in retirement. I’ve been retired for nineteen years now, and I have withdrawn only what the law requires I withdraw from my 401(k). I can’t imagine that I will ever fully deplete those savings, and my children are all doing so well that they certainly won’t need that money upon my passing. Can I leave a legacy of caring for “the least of these” among Christ’s family by allocating to Heaven’s Family all or a percentage of my 401(k) account?

A: Yes, you can do that by simply completing a beneficiary designation form with your 401(k) plan administrator. It is common to have multiple beneficiary designations for a 401(k).

Here are a few other facts that may be of importance to you:

1.) Beneficiary designations generally take precedence over instructions you may have written in your will or other legal agreement.

2.) If you are married, your spouse at the time of your death is the legal, sole beneficiary of your 401(k). This is true even of a second spouse in a marriage that took place in your senior years. However, if your spouse signs a wavier you may change your beneficiary designation.

3.) Assets in a 401(k) account are considered “income in respect of a decedent” (IRD), which means they are included in a decedent’s taxable estate. Depending on the size of the estate and the ever-changing estate tax variables, estate taxes plus income taxes on the tax-deferred 401(k) assets could be substantial for your beneficiaries. Income tax and estate tax are eliminated on the amount left to a charity. Leaving a legacy of love for our Lord’s work is a wonderful alternative to leaving your assets to children who don’t need them and to the government in the form of taxes.

David Warnock is happy to assist you with your questions regarding strategic stewardship. You can reach him at (412) 833-5826 or email him at DavidW [at] HeavensFamily [dot] org.

Strategic Stewardship