Ensuring your wishes are followed
Don’t forget to plan for what happens after you’re gone. Because your beneficiary designations generally take the place of any other instructions you leave—including your will—it’s an important part of your estate planning.
When you enroll in RPB’s plan, we require you to designate beneficiaries for your retirement account as well as your RPB life insurance policies to make sure your wishes are carried out. Beneficiaries for your retirement plan will carry over to your 403(b) and Rabbi Trust accounts. We can also apply the same beneficiary designations to your life insurance. If you don’t immediately qualify for free life insurance, we’ll keep your beneficiary form on file until such time as you do.
And don’t just set up your beneficiaries and then forget them. It’s important to review and update your beneficiaries on a regular basis—and especially after major life events like a wedding, divorce, birth, or death.
If you don't designate beneficiaries, your assets will pass to your surviving spouse if you're married, or to your estate if you're not married.
If both your primary and contingent beneficiaries predecease you, then it’s the same as having no beneficiary at all and your assets will go to your estate.
Out-of-date contact information for your beneficiaries may result in unnecessary delays in paying benefits to your heirs.
Naming a beneficiary
- You can designate any person, estate, trust, organization or charity as your beneficiary.
- You can name multiple primary and contingent beneficiaries. Primary beneficiaries receive your assets after your death. Contingent beneficiaries inherit your assets only if the primary beneficiary has predeceased you.
- If you’re married and your spouse is not your sole primary beneficiary, you’ll need to provide RPB with your spouse’s written consent.
- If you’re not married and you did not designate a beneficiary, your estate will be the beneficiary.
- You can allocate a percentage of your retirement account and life insurance benefit to each named beneficiary.
- Make sure to tell the people you choose as your beneficiaries about your decision so they know to contact RPB to receive the assets upon your passing.
Have you inherited an RPB account?
We’re available to discuss your options and help carry out your wishes for your inherited assets.
Types of beneficiaries
Upon your death, if your spouse is your beneficiary, they become an RPB participant with the same rights as you, the original participant, once your assets are transferred to their own account. That means the same rules and benefits regarding contributions and distributions (including Required Minimum Distributions) apply to the spouse the same way they applied to you with two important exceptions:
- Your spouse can’t make contributions unless they’re working for an eligible Reform Movement employer, but they can rollover money from another qualifying retirement account; and
- They can’t use a clergy member’s parsonage tax exclusion.
Your children or grandchildren can be named as beneficiaries. They will become RPB participants when they receive your inherited account, although they cannot interact with the account in the same way you did.
Non-spouse beneficiaries cannot contribute to the plan unless they meet RPB’s eligibility requirements.
Benefits are paid out over five years as taxable income. Alternatively, they can roll over their RPB account to an “inherited IRA,” which may help defer income taxes.
You can divide the money in your account however you’d like. It does not have to be divided into equal portions.
For children who are not of legal age, you must appoint a guardian or an administrator of their account.
If you designate a trust as your beneficiary, upon your death a direct distribution will be paid to the trust as taxable income. RPB will automatically withhold 20% of the distribution for federal income taxes.
To designate a trust as your beneficiary, include a copy of the trust agreement, including the signature page, when you submit your completed beneficiary form.
If you designate a charity or other organization as your RPB beneficiary, a direct distribution will be paid to the organization as taxable income upon your death. RPB will withhold the appropriate income taxes from the distribution.
To designate an organization as your beneficiary, contact the charity or organization for instructions and include the pertinent information when you submit your completed beneficiary form. Arrange for someone to notify the organization or charity of your death so that it can contact RPB.
Divorce implications: understanding a QDRO
In the event of a divorce, your ex-spouse may be awarded a portion of your RPB retirement account. In such a situation, RPB requires you send us a qualified domestic relations order (QDRO) in order to complete the transfer.
What’s a QDRO?
- It’s a legal document that creates or recognizes the existence of a non-participant’s right to receive all or a portion of the benefits of the participant’s retirement plan account.
- It may be issued as either a separate order or included as part of a divorce decree or court-approved property settlement.
- A QDRO is the only legal document that will be accepted to divide an RPB account in the event of a divorce.
Protect yourself from the unexpected.
RPB provides insurance coverage—including complimentary life insurance—to eligible participants.