Maskot / Getty Images “The most common mistake I have seen is that there is no beneficiary named at all,” Helveston said. In that case, the account may have to go through probate—a costly, time-consuming legal process. Key Takeaways Your 401(k) passes to the person you name on a beneficiary form—not through your will. Spouses and non-spouses face different rules and tax implications when inheriting a 401(k). Forgetting to update your beneficiary or leaving it blank can lead to probate and unintended ...

Core Insights - The importance of beneficiary designations in retirement accounts is emphasized, as outdated information can lead to unintended consequences regarding asset distribution [1][3] - Retirement accounts like IRAs and 401(k)s are governed by beneficiary designations rather than wills, which can result in disinheritance if not properly updated [3][4] Group 1: Beneficiary Designations - Beneficiary designations must be reviewed regularly to ensure retirement accounts are prepared for transfer to heirs [2] - The rules governing retirement accounts allow them to bypass the probate process, facilitating quicker access to funds for heirs [4] Group 2: Tax Implications and Distribution Rules - Spouses inheriting an IRA or 401(k) can roll the funds into their own accounts and may delay required minimum distributions (RMDs) until age 73, allowing for tax-free growth [5] - Children inheriting these accounts do not have the same rolling option and must either take a lump-sum payment or distribute the funds over a maximum of 10 years [5][6]