Q: Is it necessary to have employees update their beneficiary forms? If yes, how often?

A: Absolutely—maintaining current beneficiary information is one of the most critical components of benefits and 401(k) administration. Best practice is to have employees review and update their beneficiary forms annually. This practice should extend to any benefit plan that provides a monetary-value benefit, including:

• 401(k) Retirement Plans
• Pension Plans
• Life Insurance
• Accidental Death & Dismemberment Insurance
  

Keeping beneficiary data up to date helps mitigate risk for your organization and ensures employees’ wishes are honored during life-changing events.

Why Annual Updates Matter

1. Risk Mitigation - Outdated beneficiary designations can expose the company to administrative headaches and potential legal disputes.

2. Employee Support - In the event of an employee’s death, current beneficiary information ensures benefits flow to the intended person without delay.

3. Peace of Mind - Employees and their families gain confidence knowing their benefit plans reflect their true wishes.

A Real-World Example

A manufacturing firm had an employee who divorced and later remarried—but never updated his beneficiary form. When he passed away, his life insurance proceeds were paid to his ex-wife rather than his current spouse, causing significant distress for everyone involved. This scenario underscores why annual reviews of beneficiary forms are not just a “nice to have,” but an HR imperative.

Tips for Encouraging Annual Reviews

1. Calendar Reminders

   • Send yearly email or intranet notifications reminding employees to log in and confirm their beneficiary elections.

2. Education & Resources

   • Partner with your broker to offer webinars, FAQs, or quick-reference guides that explain:

     • What a beneficiary designation is

     • How to update forms

     • Why keeping this information current matters

3. Incentivize Compliance

   • Consider small recognition—such as “Benefits Review Champions”—for teams with 100% completion rates.

Supporting Your Team

Encourage employees to spend just a few minutes each year reviewing their beneficiary designations. With clear communication, easy-to-access resources, and consistent reminders, you can help prevent future heartache, protect your organization from disputes, and ensure every employee’s wishes are respected.