Help Your Family Claim Retirement Benefits

There are good reasons to make a record of your retirement accounts: After your death, your survivors will want to file claims for any outstanding benefits, and if you ever become incapacitated, the person in charge of your finances will have to manage those accounts for you. (For more on appointing someone to manage your finances if you can't, see Durable Financial Power of Attorney: How it Works.)

To make these tasks easier for your loved ones, you should keep a list of basic information about your retirement accounts, pension plans, and Social Security benefits. This article gives you tips on how to do that. First, however, here is a quick overview of what happens to retirement benefits after your death.

What Happens to Retirement Accounts When You Die?

Each of your retirement accounts and pension plans should name a beneficiary. (Don't use your will to name beneficiaries for your retirement plans. For more on what not to include in your will, see What a Will Won't Do.) Money remaining in the accounts at your death (and any pension payments due to you) will pass directly to the beneficiaries you have named, without the hassles and expense of probate court.

You Might Be Required to Name Your Spouse as Beneficiary

For some plans, including 401(k)s and most pension plans, the law requires you to name your spouse as beneficiary unless he or she signs a form giving up that right. For IRAs and employer profit-sharing retirement plans, you may name any beneficiary you choose. (If you live in a community property state, however, keep in mind that your spouse has a legal right to half of the money that you earned during marriage. If you're married and you don't want to leave all your retirement benefits to your spouse, make sure you know the legal rules. (See If You Don't Want to Leave Retirement Accounts to Your Spouse.)

Listing Your Retirement Accounts and Benefits

It shouldn't take long to make a record of your retirement plans and accounts. Taking a little time to do it now may save your loved ones a good deal of trouble down the road.

At minimum, you should make a list of every plan that you have, whether or not it pays benefits now, or whether you expect benefits in the future. Remember to include:

• employer-sponsored plans or pensions
• IRAs (traditional, Roth, SIMPLE, or SEP-IRAs), and
• Keogh, profit-sharing plans, or self-employed 401(k)s for small business owners.

For each account, list the following information:

• the name of the managing organization or financial institution
• the account or identification number
• contact information for your account manager or adviser (if any)
• whether or not you're currently receiving benefits, and if so, how much, and
• the location of your plan statements.

You should also list and describe your Social Security benefits, including those based on your earnings (or disability) that go to your family members and those you expect in the future.

Remember to review your list of accounts and benefits periodically. Update your records if you acquire or terminate a plan or change the location where you file your plan statements.

Storing Your Information

Some of your retirement information is sensitive, so you'll want to file your list in a secure location, such as a locked cabinet or fireproof safe at home. But it's important to tell those closest to you where the information is and how to get to it. Most importantly, if you've named an executor, or an agent under a durable power of attorney for finances, be certain this person can find this information when they need it. For more information on getting your records organized and making them accessible to your loved ones after you die, see Practical Estate Planning: Organize Your Documents and Help Your Executor: Secured Places and Passwords. For more general information, see Getting Your Affairs in Order.

To help you organize retirement accounts and other important information, you can turn to Nolo's Get It Together: Organize Your Records So Your Family Won't Have To, by Melanie Cullen and Shae Irving. This workbook with CD-ROM provides a complete system for documenting information for your executor, caretakers, and other loved ones.