Naming and reviewing beneficiaries on your Lockheed Martin 401(k) retirement plan is often not given the attention it deserves.  Many people assume that their Will is enough to make sure their money goes where they want it to go, but that may not always be the case; therefore, it’s important to review your beneficiaries and make necessary adjustments as life changes.  

For Lockheed’s 401(k) plan, when you first enter, you are required to list a beneficiary. You can easily do so under the Account Information on the Savings Plan Participant website. Lockheed has the plan set up so that your spouse, if married, is required to be your primary beneficiary; however, if you want to designate someone else, you may. In order to do so, your spouse must provide notarized, written consent on a Beneficiary Designation form that he or she is relinquishing their right as primary beneficiary. A contingent, or second, beneficiary is not required to be listed, but is highly suggested.  The number of beneficiaries you may list is unlimited, but each beneficiary listed must include a percentage and the total percentage must equal 100%.  In the event, you pass away and there is not a beneficiary listed, the dollars will pass to your spouse, if married, and to your estate if unmarried.

One of the most frequent questions we get is “What can happen to my money if I don’t review my beneficiaries and I divorce”?  If you divorce and do not change your beneficiary, your ex-spouse has the possibility of still inheriting your funds.  This is because a designated beneficiary trumps the directions found in a Will.  This issue has occurred on a number of occasions and has even been argued in front of the Supreme Court.  In the case of Hillman vs. Maretta. Mr. Hillman had his first wife Judy listed as his beneficiary. Years later after they divorced and he remarried, he never changed his beneficiary from Judy to his second wife.  When he died, there were legal questions as to who would receive the money. The Supreme Court ruled unanimously in favor of Ms. Maretta, the first wife, and Mr. Hillman’s widow, the second wife, received nothing.  So, be sure to always go back and make any necessary changes if you divorce.

There are advantages to having your beneficiaries specifically designated.  First is the ability to direct the funds to the people you wish.  Second is the ability to avoid probate as the assets will pass directly to your named beneficiary. Third is the ability to withdraw funds over a longer period of time, allowing the funds to remain invested and grow tax-deferred or tax-free, depending on the type of 401(k) plan you have: traditional tax-deferred or Roth. Forth is the ability to have peace of mind, which is often the most valuable advantage of all.  

Now that you know the Importance of Beneficiaries on your Lockheed 401(k), it’s time to take a few moments to log into your LM People and review who you have listed.  Don’t forget to review the beneficiaries for all your other retirement accounts, annuities and life insurance policies!

For more tips like these, click here to sign up for our weekly email blog newsletter. If you would like to get better educated on Lockheed retirement strategies, click here to download our Free Report titled Retire with Confidence: The Top 4 Things You Can Do Now to Maximize your Lockheed Retirement. And, if you want to have face time with a Lockheed Retirement Specialist², you can click here to schedule an appointmentclick here to sign up for our Lockheed Retirement Workshop or click here to just give us a call (817) 210-3444.

Be sure and check back next week for more incredibly valuable information. Cheers!

Disclosures*

Financial Planning and Investment Advisory offered by SWMG, LLC a Registered Investment Advisor.

Lockheed Martin Retirement Specialist is not an official title or professional designation nor is it conferred by Lockheed Martin on any individual or company.

Our Complementary consultation and free report are for informational purposes only and provided free without any obligation to utilize or retain our investment advisory services.

SMWG, LLC is not affiliated with or endorsed by Lockheed Martin Corporation. Our expertise comes from working with LMT employees for several years and helping them to retire with confidence.

Investing involves the risk of loss, including loss of principal. Past performance does not guarantee future results. Investment products are not FDIC insured, have no bank guarantee, and may gain or lose value. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable for a client’s investment portfolio.

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