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Chapter 18. Cashing In or Out of Your 40... > What Happens If You Die - Pg. 183

Cashing In or Out of Your 401(k) 183 What Happens If You Die Do you want the good news first, or the bad? We'll start with the good. If you die, the IRS won't impose a penalty on your money. The bad news is you won't be around to take advantage of this. So who gets it? Remember in the very beginning when you were filling out all of that paperwork and you were asked to designate a beneficiary or beneficiaries? If you were married at the time you were required to put down your spouse. Again we run afoul of those IRS rules for qualified plans. If you didn't put anyone down--which would be unusual for they try to get all of the paperwork taken care of--and if you are now married, they will assume you would want your spouse to inherit the proceeds in your plan if you should die. But don't leave it to chance. When you get your statement, check to see whom the beneficiary is. If it is not on the statement, call the plan. Make any changes necessary to keep it updated. Our Advice Check to see if you have filled out or updated the beneficiary designation not only on your 401(k) plan but also on your insurance policies. You may have started with the company long before you were married and you may have designated your mom or, worse yet, an old boyfriend or since-divorced spouse. Change that ben- eficiary designation.