What benefits are available to a beneficiary?
A beneficiary is someone who will receive your 403(b) or 457 plan assets if you die before taking them yourself. When you enroll in a 403(b) or 457 plan, you must designate a beneficiary. If you are married, you may be required to make your spouse the beneficiary unless he or she gives up that right.
The designation of a beneficiary has significant consequences, so it’s a decision you should consider carefully. Because beneficiary designations supersede a will, you’ll want to coordinate them with the rest of your estate plan. Consider the beneficiary designations you’ve made on life insurance policies, individual retirement accounts (IRAs) and investments.
You may also want to choose a contingent as well as a primary beneficiary. A contingent beneficiary will receive your plan assets if your primary beneficiary dies before you or disclaims (refuses to accept) the inheritance.
You should review your beneficiary designations periodically and update them when necessary. Failing to update the designations in light of significant life changes such as marriage, divorce, death of a beneficiary or birth or adoption of a child may lead to unintended transfers and tax consequences. For more about beneficiary designations, read Choosing a Beneficiary and Keep Beneficiary Designations Up-to-Date.
In addition to the assets from your 403(b) or 457 plan that pass to your beneficiary, CalSTRS and CalPERS provide benefits to survivors when your death occurs either before or after your retirement. To learn more, visit CalSTRS or CalPERS.
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