In the event you pass away, you want to ensure your 401(k) assets are inherited by a person or cause you care about. To ensure this happens, it’s crucial to add a beneficiary for your 401(k) account.
​
When setting up your Guideline 401(k), you will be asked to designate a beneficiary within the Account Settings page. Although a beneficiary designation isn’t mandatory, you should take the time to choose your beneficiaries. This is also beneficial to those close to you, as it will save them the hassle of determining who will benefit under the default language of the plan.
​
It’s also important to note that a 401(k) plan is never subject to the direction you provide in a will. If you name a beneficiary for your 401(k) plan in your will but fail to designate them according to the process below, your account will be distributed according to the default beneficiary language in the plan and not what is stated in your will.

If you’re single, you may select anyone as your beneficiary (e.g. your parents, siblings, or that favorite niece of yours). However, if you get married, by law, your spouse takes precedence over any previously designated beneficiaries and automatically becomes your sole primary beneficiary.
​
If you would prefer to designate someone other than your spouse, your spouse must provide a written waiver confirming acceptance, and you must complete the designation process for your non-spouse beneficiary.
​
It’s also important to note that if you divorce, your former spouse’s rights to your account will not be revoked automatically, even if you have a domestic relations order (DRO) that gives a portion of your account balance to your former spouse or where they agree to waive any right to the 401(k) assets. In this case, you’ll want to ensure your beneficiary is updated to another person or entity if you no longer want your former spouse to be your beneficiary.
​

Primary beneficiaries are first in line to inherit your retirement savings.
​
Secondary beneficiaries will inherit your retirement savings only if all primary beneficiaries are unable to claim the funds. Designating a secondary beneficiary helps ensure there’s always someone in line to receive your 401(k), even if you forget to update your designated beneficiaries over the years.
​
You may select up to 10 primary beneficiaries and 10 secondary beneficiaries. If a primary beneficiary is unable to inherit the funds, their portion will be evenly distributed to the other primary beneficiaries before any secondary beneficiaries can claim the funds.
​
Once you select your beneficiaries, we recommend letting those people or organizations know. Doing so will ensure they know to contact us when they’re ready to claim your benefits.
​

In general, you can leave your 401(k) account to the following beneficiaries of your choosing:

A few notes on specific beneficiaries are below.
​

While you can name a minor as a beneficiary, if the minor has not turned 18 by the time they inherit your 401(k), a court of law will have to appoint a legal guardian to receive the money on their behalf. This ensures the guardian has a legal requirement to take action only in the best interest of the minor.
​

When setting up a trust, you should consult with an estate attorney to ensure it meets all necessary legal requirements. Otherwise, your beneficiaries may face significant tax disadvantages or be disqualified altogether.
​

You can elect to designate a non-individual, such as a charity or “for-profit” entity as a beneficiary. In this case, the funds would have to be distributed all at once, which could result in adverse tax consequences for non-charitable, for-profit businesses. Charities, on the other hand, can receive the benefits as 100% tax-free income.
If you decide to include a charity as a beneficiary, please ensure the charity’s tax ID is included within the Account Settings page. In the event of your passing, Guideline will contact the charity directly to send the funds.
​

If all your beneficiaries are unable to inherit your retirement savings or if you wish you can name your estate as your beneficiary. The executor (the individual appointed to administer your estate) will either need to contact us and have a notarized Small Estate Affidavit completed or go through probate to retrieve an IRS letter for the probated estate.
​

If you don’t name a beneficiary, or if none of your beneficiaries survive you, your account will be distributed in the following order:

To ensure your assets are distributed according to your wishes, ensure a beneficiary is added within your Guideline account. It’s also good practice to revisit your beneficiary designations once per year to ensure no changes need to be made.

​