Beware the Ides of March: Update your 401(k) beneficiaries before you meet Caesar's fate

The Ides of March are upon us! So there is no better time to talk about the consequences of letting your guard down and betrayal.

You work hard. You save money. You squirrel away every tribute penny (if we are talking Rome during Caesar’s reign) into your 401(k), thinking about the Italian villa it might one day afford you. But then, one day, you don't wake up. It's not the Mediterranean waiting for you on the other side, but perhaps something less tangible, more ethereal.

Back on earth, though, there's a scramble. A scramble for your hard-earned pennies, those financial sacrifices you've diligently stuffed away in your 401(k) for the retirement you'll never see.

Here's where things get interesting, or rather, where they could've been less alarmed had you remembered to update your beneficiaries on that oh-so-important part of your future: your 401k plan.

Imagine this: your evil brother. The one who, let's just say, has always had more interest in your wallet than in your wellbeing. Now imagine him getting his hands on your savings. The thought alone is enough to make you wish you could haunt him from the great beyond.

This happened in the real world, right here. (The name of the former employee, and family members involved, were altered to protect their privacy.)

On a seemingly ordinary day, Denise Cunha our Director of Benefits and Payroll / Vice President and 401(k) Plan Administrator, received a request that would shed light on the importance of an oft-overlooked necessity – keeping the beneficiaries of your 401k up-to-date.

It all started when the 401(k) company called Denise to inform her that a former employee, Julia, had passed away unexpectedly. Julia’s money in her 401k account remained with Embrace’s 401k plan, despite Julia having left the company. The 401(k) company's claims department asked Denise to confirm the beneficiary for a death claim being made by the Julia’s brother - Brutus. This is a normal process put in place to safeguard beneficiary claims.? Brutus was confidently claiming that he was the rightful beneficiary, expecting a swift transfer of assets into his account. Brutus argued that he was Julia’s only surviving relative; he should rightfully inherit everything.

It is Denise’s responsibility is to ensure that the proper beneficiary is paid in order to ensure a smooth transition of assets. Upon reviewing the Julia’s records, Denise was surprised. The beneficiary section, which should have been updated periodically, showed no changes since Julia opened the account decades ago. To her dismay, the listed beneficiaries were Julia’s parents, both of whom had passed away several years prior. There was no mention of Julia's surviving spouse, Calvin, whom she had married a few years prior. There was absolutely no mention of Julia’s brother Brutus.

Denise, bound by her professional ethics and the legalities surrounding beneficiary claims, informed the 401k company that Brutus was not listed as a beneficiary. Per the plan document, Julia’s surviving spouse would have full claim to the money in a case where no active beneficiaries are named.? Denise found herself in situation she had never seen before, confronted with someone trying to make an illegitimate claim as a beneficiary. Denise not only safeguarded the interests of those involved but also reinforced the trust and integrity inherent in her role as a 401(k) administrator by flagging this false claim and ensuring the rightful heirs were protected.

Updating your beneficiaries is like setting a password on your digital life. You wouldn't want just anyone scrolling through your photos, reading your emails, or, in this case, walking away with your financial future, would you? And yet, so many of us forget this simple step, leaving our legacies to chance, or worse, to the brother with dubious morals and an even more questionable financial acumen.

Let's not mince words here: not updating your beneficiaries is akin to leaving your house keys with a known thief and then being surprised when you come home to an empty living room. It's not just about the money or the Italian villa dreams; it's about making sure your hard work benefits those you actually care about, not those who cared enough to look through the legal loopholes.

So, take a moment. It's probably less time than you will spend deciding what to watch on Netflix tonight. Log onto your accounts online, make a note in your calendar. Update your beneficiaries. Because, in the end, the real horror story would be your evil brother, cocktail in hand, toasting to his good fortune on the deck of your would-be villa, all because you forgot a simple update.

Your future, or rather the future of your hard-earned savings, deserves that much. Don't let the villain of the story be laziness or oversight. Be the hero of your own financial narrative by making that update today.