What Happens to My Retirement Account When I Die?
Aug. 11, 2023
When you’ve spent your entire working life building up a retirement account, you may have questions about what will happen to it when you pass away. Who gets it when you’re gone? Can you choose who gets what? Will it be easy for your loved ones to navigate the process? These are all important questions to answer.
If you are seeking guidance in estate planning matters, including finding out what will happen to your retirement account when you die, reach out to the Law Office of Geoffrey Fong today. Attorney Geoffrey Fong proudly serves individuals and families in Rocklin, California, as well as the areas of Roseville, Folsom, and Citrus Heights.
Decedent Retirement Accounts
When an individual with a retirement account dies, any and all assets that are left within the account will pass to the account’s designated beneficiary.
In many cases, this beneficiary is the decedent’s surviving spouse. In fact, when it comes to accounts such as a 401(k) and many other pension plans, if you are married, you are actually required to list your spouse as the beneficiary of the account.
What a Spouse Needs to Do
If you pass away and your retirement account assets pass to your spouse, there are certain steps your spouse will need to follow in order to access the funds, including:
Notifying your employer or account administrator of your death
Making an official claim to take possession of the account
Choosing to cash out the funds or potentially roll the account over under their own name
The process and options available to surviving spouses are rather straightforward and can be clearly explained and prepared for ahead of time by working with an experienced estate planning attorney.
Other Beneficiaries
For designated beneficiaries who are not spouses, the available options and restrictions are different.
Options
A non-spouse beneficiary of your retirement account has the following options available to them regarding what they can do with the money:
Cash out all funds and pay applicable taxes.
Choose a “five-year rule” payout, requiring all funds to be paid out within five years of your death.
Choose to treat the account as inheritance, requiring full payout by December 31 of the year of your death.
Restrictions
Non-spouse beneficiaries do not have the option of rolling over the account into another account under their own name. Additionally, while spouses can receive the funds from the account tax-free, non-spouse beneficiaries will be required to pay all applicable taxes.
No Beneficiaries Listed
If there is no designated beneficiary for your retirement account at the time of your death, the assets contained in your account will be added to your overall estate, which will go through probate to be dispersed.
Including Your Retirement Account in Your Estate Plan
Being aware of your options and understanding how your decisions and designated beneficiaries will affect the process of distributing your assets after your death can feel overwhelming and complicated. Working with a skilled estate planning attorney to make your retirement account a part of your estate plan is a wise choice.
Helping You Protect What You’ve Worked Hard to Build
Making sure you leave something behind and providing for those you love is what you’ve been working toward for years. Don’t let uncertainty or lack of understanding get in the way of giving yourself and your family confidence about the future. Knowing how your retirement account will be handled when you’re gone can give you that peace of mind.
At the Law Office of Geoffrey Fong, you can get the knowledgeable legal guidance you need in all aspects of estate planning. Serving clients in Rocklin, California, as well as the surrounding areas of Citrus Heights, Folsom, and Roseville, attorney Geoffrey Fong has the experience and insight you need to position you and your loved ones securely for the future. Get in touch today to schedule a consultation.