Beneficiary

A beneficiary in the context of a 401(k) is the person or entity designated to receive the assets in the 401(k) account upon the death of the account holder.

The account holder can typically choose anyone as a beneficiary, including a spouse, children, a trust, or a charity. In some cases, if the account holder is married, the spouse may have certain rights to the 401(k) assets unless they specifically waive those rights.

The beneficiary designation is important because it generally overrides any contrary instructions in a will or trust. Therefore, it's crucial to keep beneficiary designations up to date, particularly after major life events like marriage, divorce, the birth of a child, or the death of a previously named beneficiary.

In the event of the account holder's death, the named beneficiary would need to contact the 401(k) plan administrator to claim the assets. The tax implications and distribution options for the beneficiary can vary depending on their relationship to the deceased and the specific rules of the plan.