How to Handle a 401(k) During Estate Planning in Tampa

A Gallup poll found that about 60% of Americans have a retirement savings plan, such as a 401(k). These retirement plans can be incredibly powerful investment tools, but what happens to them after you pass away? Who receives your 401(k), and how should you integrate your retirement accounts into your estate plan? These are common questions, and you can explore them during a consultation with an experienced Tampa estate planning lawyer.

Find Abandoned 401(k)s First 

Your first step should be to locate any old or abandoned 401(k)s you might have under your name. This issue is more common than you might realize, as many people (especially in the boomer generation) have switched jobs dozens of times during their careers. An old employer may still have a 401(k) on file for you, and the account could hold a significant amount of cash. You can use tools like the Retirement Savings Lost and Found Database to locate old 401(k)s.

What Happens to a 401(k) After I Pass Away?

When you pass away, your 401(k) passes to your beneficiary. Check to see the named beneficiary on your 401(k) plan. This is probably your spouse or child. If you would rather the money pass to someone else, you can name someone else. This is called a “beneficiary designation,” and it is one of the easiest estate planning tools available in Florida.

Do I Need to Include My 401(k) in My Will?

You do not need to include your 401(k) in your Will. This is because a beneficiary designation takes precedence over your Last Will and Testament when determining who receives your 401(k). With a named beneficiary, this asset will circumvent probate, and your named beneficiary will receive the funds in an automatic, streamlined manner.

This might seem positive, and it is. However, you should know that your Will is relatively useless in dictating what happens to your 401(k). Even if you state in your Will that the asset should pass to a specific beneficiary, it will instead pass to whomever is the named beneficiary of the 401(k).

Consider Leaving Your 401(k) to Your Spouse

Generally speaking, spouses experience more benefits when inheriting 401(k)s. This is because a spouse can roll over the funds into their own retirement account while preserving the various tax advantages associated with 401(k)s. If you are wondering who you should name as the beneficiary of your 401(k), consider speaking with an experienced estate planning lawyer in Florida.

Can a Seminole Estate Planning Lawyer Help With 401(k)s? 

A New Port Richey estate planning lawyer should be able to assist with various issues related to 401(k)s. Whether you need to locate an abandoned 401(k) or you’re trying to integrate your retirement account into your existing estate plan, an estate planning lawyer can offer meaningful advice. Contact Knudsen Law today to learn more about your options.

Sources:

 news.gallup.com/poll/691202/percentage-americans-retirement-savings-account.aspx

lostandfound.dol.gov/