Tags: Retirement | retirement | childs death

How Child's Death Affects Your Retirement Plan

By    |   Thursday, 11 June 2015 11:09 PM

When your child dies, retirement may be the last thing on your mind. However, there are some actions to consider in this kind of crisis. Retirement money may be a resource for funeral expenses, and it will be necessary to update your beneficiary information.

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The IRS allows for what is called a hardship distribution in the time of crisis, such as the death of a child. This money could be used for funeral expenses in certain circumstances without penalty. While the money you put into the plan can be taken out for a hardship, the growth on the money can not be touched.

Individual IRA and Roth IRA plans should have specific language that explains the parameters for the plan. If a plan owner has taken a hardship distribution, there may be limitations on their contributions for a period of time.

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After a time, it will be important for parents to double check the beneficiary information on their retirement accounts. You will want to take the name of a deceased child off of the account. Some single people may have listed their child as a beneficiary on their retirement plan or a married person may have listed the child as a backup beneficiary.

There are several ways to do this. The child could have been listed individually. An “all children” designation could have been selected, or what is called a “per stirpes” designation. The per stirpes designation means your child’s descendants would be entitled to a share of the retirement funds after your death. A child also may have been named as a contingent beneficiary, meaning they are only a back-up to a living spouse.

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When your child dies, retirement may be the last thing on your mind. However, there are some actions to consider in this kind of crisis. Retirement money may be a resource for funeral expenses, and it will be necessary to update your beneficiary information.
retirement, childs death
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2015-09-11
Thursday, 11 June 2015 11:09 PM
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