In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss the critical importance of reviewing your Beneficiary Designations and how one simple oversight could create major complications for your loved ones. From 401k Beneficiary forms to IRA Beneficiary rules, they break down real-world examples showing how outdated or incomplete beneficiaries can derail even the best Estate Planning intentions. They also explain why beneficiary forms override wills and trusts and how failing to verify your beneficiaries could unintentionally send your assets to the wrong person.

Listen in to learn about key Estate Planning tips that can help Protect Your Family, preserve Family Wealth Planning goals, and reduce unnecessary taxes for future generations. Radon and Murs explain concepts like Spousal Consent, Inherited IRA distribution rules, Per Stirpes, Per Capita, and disclaimer strategies that can dramatically impact your Retirement Beneficiaries. Whether you are building your retirement checklist, planning retirement, or trying to secure your retirement for the next generation, this episode provides practical guidance to help protect your assets and ensure your beneficiary wishes are carried out properly.

In this episode, find out:

• Why Beneficiary Designations override wills and trusts in Estate Planning
• The difference between a 401k Beneficiary and an IRA Beneficiary when it comes to Spousal Consent
• How Inherited IRA rules under the SECURE Act can impact your family’s taxes
• The difference between Per Stirpes and Per Capita beneficiary designations
• Why reviewing beneficiaries regularly is essential for Retirement Planning and protecting family wealth

Tweetable Quotes:

“The beneficiary form trumps everything. You could have anything you want in your will, but if the beneficiary designation says something different, the beneficiary designation wins.” – Radon Stancil

“It’s not just about getting the money to the right person. It’s about getting it to them in the most tax-efficient way possible.” – Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Welcome everyone to Secure Your Retirement Podcast. Today, Murs and I are going to have a conversation 

around the topic of beneficiaries. And you might think about this and think, 

well, how hard is beneficiaries? Well, let me tell you. There was an article this week on 

MarketWatch, and the article’s premise was all around the fact that this couple died, 

and the goal of them were to leave their 403B account, 

the money in there, to their grandchildren. Now, there’s a really good reason why a person would do 

that versus leaving it to their children. There’s a big tax benefit. especially if your children 

don’t really need the money. And we can maybe hit on that a little bit in our conversation today. 

But ultimately what happened is the article was saying that the money now had been tied up and TIAE 

CREF is who had the money, T-I-A-E CREF, and they were not releasing the funds. 

And the reason why is because the children, the grandchildren, were not listed properly as 

beneficiaries. And the premise as to why that was the case, is that the beneficiaries had been 

changed. They had put in the form, but they did not get spousal consent properly. And in a 403B or 

a 401K, if I’m going to change beneficiaries, I have to get spousal consent. An IRA, I do not. 

And so that’s just a really big deal. So, I think maybe we could just do this. We could just kind 

of, you know, Murs, if you maybe just could explain. What is spousal consent? 

Why that’s important? And first of all, why people need to understand why I need my spouse’s 

consent on a company plan like a 401k or 403b or anything like that? Yeah, 

I think there’s certain laws that come through. I believe it’s ERISA that establishes a lot of the 

workplace retirement plans where you’ve got 401ks, 403bs. Those are your two most common workplace 

retirement plans. By default, they assume that the spouse is to become the primary beneficiary. 

And this kind of goes back to pension times and whether or not this is an outdated rule or not, 

that’s not the argument for today or the conversation for today, but it kind of goes back to… 

Like the world back when there were pensions and you had a pension so that and you had these options 

to leave certain portions of the pension. If you were to pass, that would continue on to your 

survivor, which had to be your spouse. And so, they kind of took that rule of making sure that the 

spouse was taken care of on the pension side. And they brought it into the 401k, 403b retirement 

space as well, saying that if there is. I guess it was more for if there’s one primary earner and 

one primary saver, well, the surviving spouse should have first rights to the assets as the primary 

beneficiary, unless they are willing to sign off on this thing called a spousal waiver. We’ve seen 

this document hundreds of times at this point. 

And it is interesting. So, Radon, it sounds like in the article they submitted. 

uh the beneficiary change form but it sounds like they didn’t realize that that was rejected is 

that right yeah, so they got rejected and the reality was in this particular situation they actually 

did I think get the communication back but just didn’t understand they basically got not got a 

transmission saying we received it we received the beneficiary designate you know change form but 

they didn’t realize that it did not get established um and it and This is a common practice, 

by the way. They went online, and when they went online and they looked to see, hey, 

are my beneficiaries correct? 

What it said on there is it says beneficiary form on file, and it didn’t list out all the 

beneficiaries. That’s a very common practice. However, that does not mean that the beneficiaries 

are listed correctly. It just means that they’ve got… a list of beneficiaries or a beneficiary 

there and so, that can be really misleading on that, so I let’s just talk for a second here Murs 

about like what our protocol is if we’re going to get a beneficiary change and somebody calls up 

and says I want to change my beneficiary i think all the steps that we go through to make sure that 

everything is done properly and how we would we would verify because there are some cases like i 

know at Charles Schwab and even fidelity we can see um most beneficiaries unless we’ve got a lot of 

them listed and then if we got a lot of them listed let’s say we’ve got and i think in this case in 

the article there was eight or nine grandchildren maybe even more and that’s when they’ll go to 

this whole thing on file and so what is it that you find is a good practice if you’ve got that 

scenario and you see that on file what would you do with the company just to make sure that hey you 

know what I see it’s on file but how can i verify right yeah and so before I answer that, 

what just triggered in my mind is, you know, the spousal consent document, that waiver that they’re 

supposed to sign, I know that that document typically has to be notarized as well. 

So, they could have gotten it and, you know, thought nothing of it or didn’t take the time to get it 

notarized and never resubmitted it. Now the issue they’re dealing with as well, it looks like an 

account is now in the probate process, which is a whole other pain to deal with, 

which is a big reason as to why you want to do what I’m about to say, which is double and double 

check, double and triple check your beneficiaries. So, let’s just imagine that you… 

You’ve updated your beneficiaries online. So, you are right, Raiden, you know, Schwab and Fidelity, 

I think they do, and a lot of the broker’s firms today do a really good job of showing you on your 

online platform, whether it’s Schwab or Fidelity or Vanguard or, you know, Wells Fargo or Mortgage, 

all these bigger ones, I’ve gotten pretty good at showing you online exactly what your beneficiary 

is and the percentages and the relationship and all those things that you’ve set up. So double 

checking that often, I think, is good. But sometimes they don’t show it. 

Either they’ll show on file or complex beneficiaries, which means maybe that’s because you added a 

per stirpes designation or maybe you’ve got some different trusts that are added as beneficiaries 

and it’s too much for them to list out on their website. So, they say complex or they’ll say on 

file. But in any event, when you don’t have clarity, it’s always really good to just double check 

and call the institution. This is really common in the insurance space. 

Insurance space, you know, the websites aren’t as savvy as some of the other ones, as some of the 

brokerage accounts. So, in the insurance space, whether it’s life insurance or long-term care or 

annuities or anything like that, what we do is we every year we’re calling over to the insurance 

company to verify what those. beneficiaries are on file on their systems and making sure it is what 

the client’s objectives are. And we’ve taken that to such a degree to where, 

because the last thing we want is this scenario that this article is all about is the beneficiaries 

aren’t who they thought they were. Because once death happens, you can’t really fight the 

beneficiary form at that point. It’s very, very difficult. 

And so, part of our financial planning strategy meetings that we do every year at the beginning half 

of the year is we have a part of the agenda is to verify beneficiaries. 

So, our team pulls the beneficiaries either through the websites that they have available or calling 

the insurance companies or even in the private investment space, calling them up and just verifying 

beneficiaries on file. And then we gather that and then we. make that part of the conversation. 

Hey, is everything good? Is this how you want your beneficiaries to be? Percentage is okay. Was 

anyone born? Anything changed that we need to be aware of? You know, things like that, I think are, 

while it can be overkill at times, it’s just such a good thing to have in practice to be double 

checking it year over year. Because life happens, things change, people get born, people get 

divorced, and sometimes we neglect the beneficiary form. um so just kind of taking that extra step 

is a really nice way to cover us for sure hey so while we’re on this topic of beneficiaries I think 

I’d like to kind of talk through some understandings I guess and that people may think 

because I just had a conversation today with somebody and they were a little bit confused about 

this so when we’re setting up an estate plan you’ve got a will A lot, 

most people, everybody should have a will. They have their powers of attorney, healthcare power of 

attorney. Some people have a trust. And sometimes people will think, oh, wait a minute, I can put 

in my will or in my trust, I can put in there who I want my beneficiaries to be. 

And I think what’s really, really important is for people to understand that for your 401k, 

your IRA, a life insurance policy, any of those things. The beneficiary form trumps everything. 

You could have anything you want in your will. You could have in your will, I want my 401k to go to 

my grandson. I want it to go to my son or my daughter. And I could word it that clear and it will 

mean absolutely nothing if I don’t have my beneficiary form filled out saying the same thing. 

If I have on my beneficiary form that I want it to go to my daughter. but in my will, I’ve got it 

going to my son, it’s going to go to my daughter. It’s going to go, if I had my previous wife, it’s 

going to go to my previous wife, if that’s who’s on the beneficiary. The beneficiary form trumps 

all estate documents. Now, what you can do on your beneficiary forms is you can leave the money to 

your trust, right? And now my trust document does go into play because I left it and now the trust 

entity actually received the funds. And it can control what I wish there. 

But if I had something else on my beneficiary designation, on that beneficiary designation, 

and it did not equal what was in the trust, the beneficiary form always trumps everything. 

So, it’s just extremely important for people to really know what is on their beneficiary form and to 

understand how they want to do it. But I do think we might want to just, while we’re on this topic 

again, because I kind of opened it up, Murs, could you just… kind of hit on a topic as to why 

would somebody ever want to skip their children and send, and particularly IRA funds to say their 

grandchildren, why would they ever want to have that be the case? Yeah. So, when someone, 

when a non-spouse inherits an IRA, what happens is under the new rule that got passed back a few 

years ago in the SECURE Act, the inheritance rule turned into a 10-year distribution rule where 

the dollars that are inherited, they have to be, in all essence, cleared out of that IRA by year 

10. And there is a minimum distribution that you have to take every single year. And so, let’s just 

say you’re in your 80s and you’re leaving behind a million-dollar IRA, maybe split between two 

kids. And they’re also, you know, maybe they’re in their late 40s or in their 50s, 

which typically for most people is going to be their prime earning years. And they also have kids. 

Well, for so in that example, you’ve got one child that’s inheriting five hundred thousand, 

another child inheriting five hundred thousand. They’re already making, let’s imagine, a couple 

hundred thousand as a household income. And so now they have to take this $500,000 inheritance 

over a 10-year distribution period. So that’s pretty substantial dollars that’s being added to 

their tax bill year over year for the next 10 years. And so, from your perspective as the saver and 

the one that’s passing the money down the line, well, inherently more of that money is going to go 

towards tax than you probably thought just because your kids, your next generation is in a really 

good place financially. And so, what we’ve seen from time to time as a strategy is that, 

well, you could leave it directly to, or maybe not all, maybe it’s not a 50-50 split, 

but maybe it’s, you know, a 20 split to your two kids, yeah, 

20% to each of the kids. So now you’ve given 40 to your direct next generation. 

And then to the grandkids, let’s say there’s, you know, three or four of them, and you give them 

each a smaller portion of it. And so, it goes down to them. And now they are probably in their 15 to 

20s and have next to no income. And so, they have the ability to take those withdrawals at a much 

lower, if taxable at all, type of rate, which preserves your dollars, 

less of it going to taxes. And it probably satisfies your want to take care of your grandkids as 

well. So, it is this idea of… 

Just thinking about how you want inheritance to go and also thinking through, you know, who’s in a 

place to inherit and still not get their tax situation blown up versus who do we need to think 

about a little bit more that’s in a good place financially and what can we do a little bit 

differently? Because at the end of the day, very likely what someone may do, let’s say you leave it 

to the two kids and the two higher earning kids and they now take the distributions. 

and pay the taxes at their tax rate, which is going to be the 20 plus percent tax rate. And what do 

they do next? Well, they hand it to their kids, right? For either for college or for expenses to 

help them buy the new car. So, they just paid higher taxes to give it to them when they could have 

just skipped them, given it directly to the grandchild, have the grandchild take distributions at 

their very low tax rate and with the same accomplishment of being able to help with college funding 

or buying that car, down payment on the first house, all those things that grandparents want to do 

for their grandkids. just being a little bit more strategic with those beneficiary designations. 

It’s not just about getting the money to the person. It’s about getting it to them in the best way 

possible from a tax efficiency perspective. Yeah. So, one thing I was just going to mention on that 

really quick is sometimes the person may go, well, I don’t know if I really want to do that. 

Maybe my grandkids are not old enough to handle that yet. And I want my children to make that 

decision. And just so you know how you can do that, it’s a pretty easy process if you just want to 

leave it so that your son or daughter can make the decision later. Because if they understand it, 

they’re not going to want to receive the funds because, you know, a lot of times… would happen is 

if I were to have received IRA money today and then I said, well, I don’t need the money or I’m 

going to help my kid go to college, I would pull the money out of the IRA, pay my tax bracket, 

which is higher than my kid’s tax bracket and then give them the money. It’s the worst way to do 

it. However, if the original owner would have put their son or daughter as the primary beneficiary 

or the contingent, doesn’t matter, puts them in line and says, this is going to go to my children. 

But then below them, they state that they want, if my child was not in place, 

it would then go to the grandchildren. And what that allows is it allows your child to then have 

the power to disclaim. So let me walk you through. Let’s pretend it’s me, right? Let’s say that I 

am going to inherit this IRA. My mom leaves me her IRA. So, she leaves it directly to me. 

And so, I’m the beneficiary, but she also puts my two children as contingents or tertiary or second 

contingent, just wherever I’m at in the line. She puts those saying that if I’m not in place, they 

get it. So now I find out that I’m the beneficiary. So, I get the beneficiary information and I can 

now disclaim all or a portion of that money that’s going to come to me. 

And when I disclaim it. it automatically pushes it to the next beneficiary. I cannot say where it’s 

going to go. I can only push it to the next in line, not to the side, but in line. 

And so, by my mom having put down my two children, I could disclaim it and it goes directly to them. 

Then so if I know I’m going to help my child out anyway, I can disclaim it. It goes directly to 

them and they have to pay it their tax rate. And the beauty of that is if that were to happen 

today, their tax rate is going to be relatively low, especially compared to somebody who’s in 

there. prime earning years. And that’s anybody that you have somebody in their 50s and 60s, 

that’s their prime earning years. And then they got children in their lowest income years for the 

most part. Well, that’s the reason why we would do that. Anything else on this topic of 

beneficiaries? I think you were going to say something. I might cut you off there. I was just going 

to bring up, and it helps that you brought up a technical term. So that term of disclaim is a 

technical term that kind of reject your inheritance or a portion of it. and send it down the line. 

There are two other technical terms that I think are important for people to understand in the world 

of beneficiaries. The first is per capita, and then the second is per stirpes. Per capita being 

it’s a percentage. When you fill out a beneficiary form, 

you’re assigning percentages. So, let’s imagine I’ve got two kids, and I want to leave it to them 

evenly, so 50-50 split, right? And if one is not there to inherit it, 

then their 50% share goes to the other. So, kid A, let’s just say kid A is not around to inherit. 

So, kid B gets 100% of the inheritance. That’s what per capita is. And if you have three people, 

you have four people, you have five people, all it is splitting up to 100%. If someone’s not 

there, then the others get the share of it. Per stirpes, though, I think has become more popular as 

kids, as your kids have kids and families and you want to help take care of the families. You want 

it to stay in the lineage and go down the line. So per capita is across the lineage and per stirpes 

is going down the lineage. So, let’s just go back to my example. 

If my two kids were the primary beneficiaries and they also have kids, so my grandkids. 

I could do per stirpes. And so, if child A was not there to inherit, 

child B would not get his 50% share through per stirpes. Child A, if they’re not there to inherit, 

that 50% would go down their lineage down to the next generation, which would be the grandkids. 

So, there’s a lot more to that, but per stirpes, per capita, and disclaiming some three technical 

terms in the beneficiary space. Bottom line. is check your beneficiaries check them often you know 

people leave the workplace they go to another company they forget about the old 401k they forget 

about how they set up beneficiaries there uh and you kind of you know it’s so many times we 

hear about people saying oh yeah I have an account over there and i haven’t looked at it in five or 

ten years well i would say take a look at it check your beneficiaries because you never know uh 

what could happen um and then also just have that be a little bit strategic on how you’re planning 

for inheritance and the different ways to do it like we just talked about. Understanding some of 

those terms can make a big difference when it comes down the line to your inheritors. 

But that’s all I got. Yeah, and I always like to let you know is that if you’re listening to this 

and you’re going, man, I kind of like to talk this through on a very personal level, you can always 

do so. Just go to our website, pomwealth.net. And you’ll see all over the website there, 

it’ll say schedule a call. And then you just click on that, and you’ll be able to schedule a call 

with us. You can go directly to the contact us page and do it that way as well. We’d be glad to 

have a conversation with you and kind of walk through this. this or any other topic you want to 

talk about. Well, we hope you enjoy today’s episode.