Who Should I Make My 401(k) Contingent Beneficiary?

A 401k plan is designed to provide income for you during your retirement. Since there you don't know for certain how long you will live after retirement, there is a chance you may pass away before exhausting your 401k funds. In such cases, it's a good idea to set at least one beneficiary and one contingent beneficiary.


A beneficiary is an individual or entity you choose to receive the proceeds of your estate upon your death. You may select a beneficiary to receive funds from a life insurance policy, stock portfolio, retirement accounts or cars and real estate. The same beneficiary may receive all of your assets, or you may select multiple beneficiaries to receive a select portion or percentage of your assets.

Contingent Beneficiaries

A contingent beneficiary is a secondary individual or entity you choose to receive funds from your 401k, either subsequent to, or in place of, your primary beneficiary. This is particularly important in the event your main beneficiary passes away before you do, or cannot be located at the time of your death. Very often, a spouse or parent is designated as the primary beneficiary with children or grandchildren listed as contingent beneficiaries.

Choosing Contingent Beneficiaries

You should choose contingent beneficiaries for your 401k depending on who you want to receive your assets. As your life progresses, you may find it necessary to alter your beneficiaries frequently to accommodate births, deaths or marriages or business. It is also important to consider the tax implications to your beneficiaries. Distributions from a 401k account are subject to different income taxes than other types of inheritance. Always consult with your estate planner or tax professional regarding your unique situation.

Identifying Beneficiaries

When you decide on a beneficiary and contingent beneficiary, take the time to be as clear as possible in your instructions. Include your beneficiaries' social security numbers to ensure they can be properly identified, and to help avoid disputes following your death. If your beneficiaries cannot be properly located, your 401k proceeds may be paid directly to your estate where they can be vulnerable to claims from creditors or other legal heirs.