Spouse is the default beneficiary of ERISA plans?
What I learned is naming someone other than a spouse as the beneficiary of certain 401(k) or other ERSA plans is a two-step process:
- A waiver of spouse rights must be obtained, and
- the plan’s beneficiary form must be updated naming the intended non-spouse beneficiaries.
Both steps are essential.
How does this rule square with the court ruling of the 2005 “Pension Pickle” case in 2005 where the decedent’s $1.0 million pension was inherited by her sister, depriving the surviving spouse (husband) of the inheritance? The case was reported by New York Post. See story here https://nypost.com/2005/01/31/pension-pickle-broke-widower-loses-1m-to-in-law/
Permalink Submitted by Alan - IRA critic on Mon, 2025-02-24 22:50
That article makes no sense unless the TRS was not an ERISA plan, which I doubt. There have been cases like this where the spouse brings suit against the other beneficiary and the plan under the ERISA statutes.
Permalink Submitted by John Lau on Wed, 2025-02-26 11:35
So the initial ruling was incorrect? But it went through the lower court all the way to the New York Supreme Court. I wonder if there’re exceptions to the default rule that we should know.
Permalink Submitted by Alan - IRA critic on Wed, 2025-02-26 13:59
Not applicable to that case, but a plan may not apply the ERISA beneficiary requirement for the first year after the date of marriage per tax code Sec 1055(b)(4).
Otherwise, the article is probably flawed due to incorrect and incomplete information. For example, the spouse could have retained legal representation not versed in ERISA, the plan might not have been an ERISA plan, or the spouse might signed a waiver and then forgot about it. I would ignore this article as an outlier.
That said, I would also recommend that any spouse get named on the plan to reduce the very small chance of a similar occurrence.