Question

Why Should HR Remind Employees to Review Their Beneficiary Designations Every Year?

Answer

Beneficiary designations determine who receives an employee’s life insurance, retirement plan, and other benefits if they pass away. If those forms are outdated, the benefits may be paid to someone the employee no longer intended to receive them, such as a former spouse. Unfortunately, these situations often come to light after an unexpected death, creating added stress, delays, and financial hardship for loved ones during an already difficult time.

HR can help prevent these issues by encouraging employees to review their beneficiary designations at least once a year and after major life events, such as a marriage, divorce, the birth or adoption of a child, or the death of a named beneficiary. When HR learns of one of these changes, it is also a good opportunity to remind the employee to update their records.

While employees are updating their beneficiary information, it’s also a good time to remind them to review their emergency contact information. Keeping both records current helps ensure the right people are notified and that the employee’s wishes are carried out when it matters most.

Related Resources

• IRS: Getting Married and/or Having Children: Information about reviewing retirement plan beneficiaries after marriage or the birth or adoption of a child.
• IRS: Retirement Topics, Divorce: Guidance on updating retirement plan beneficiaries following a divorce.
• SHRM: Beneficiary Designation Form: A sample form employers can use to document beneficiary elections. SHRM membership may be required.

AIM HR Solutions can help employers develop clear employee communications and processes for keeping beneficiary and emergency contact information current. Contact us to learn more at HRInfo@AIMHRSolutions.com.

AIM members can call the HR Helpline at 800-470-6277 or email Helpline@aimnet.org for guidance.