One of the most common questions we receive from State of Missouri employees and retirees is, “what happens to my MO Deferred Comp account if I pass away?” The simple answer, it passes to the beneficiaries you have listed on your account. Your beneficiary can be your spouse, child, best friend, a trust, or even a charity. Basically, it can go to whoever you want it to, including multiple people. With that being said, if you are married, federal law requires that your spouse be your primary beneficiary unless he or she signs a written waiver stating that you can name a different recipient. I also want to mention that a minor cannot legally inherit your retirement savings until they reach a certain age, in Missouri that age is 18. If you name a minor as your beneficiary, your retirement account would be distributed to a court-appointed custodian upon your death. This person will be in charge of managing the funds until the minor reaches the age of 18. If you would like to name your children, grandchildren, or another person under the age of 18, we suggest speaking with a lawyer and setting up a trust to receive those assets on behalf of your beneficiaries. Now if you do not name a beneficiary and you pass away, your assets will likely go through probate. Probate is a legal process where the court must sort out your financial situation and determine how to distribute your assets. This is a lengthy process that can drag on for years. It can also result in your savings going to the wrong person. By naming a beneficiary you can ensure your money is distributed the exact way you want. If something were to happen to you, your beneficiaries will have the same distribution options and control as a terminated state employee. This means they can withdraw your savings penalty-free at any age – minors being a possible exception –, roll the money into a personal retirement savings account, or leave the money right where it is and continue to take advantage of the deferred comp plan’s low fees and powerful investment lineup. Life changes, so it’s important to not only name a beneficiary for your deferred comp account, but to also review it periodically. Divorce, remarriage, births, deaths, etcetera are all reasons to evaluate your account heirs. You can appoint or update your beneficiary information with deferred comp by logging into your account, selecting Beneficiaries from the drop-down box in the middle of the page and then following the prompts. You can also complete and return the Designation of Beneficiary Form found on www.modeferredcomp.org.
