Can a 401k beneficiary disclaim benefits?
A participant in a 401k plan named 4 nephews and 1 neice as equal beneficiaries.
At the time of the named beneficiaries he was single. At a later date he got married.
I am not sure that he named a new beneficiary. If that be the case and his wife is the
beneficiary can she disclaim the benefits and have the proceeds paid to the original
beneficiaries? If so would the money go directly to the beneficiaries or would it be
paid to the participants estate?
Permalink Submitted by Alan - IRA critic on Wed, 2013-06-19 18:58
His wife is the default beneficiary except in some cases where the marriage occurred less than 1 year before the date of death. While his wife could disclaim, she cannot direct the benefits to prior named beneficiaries. In other words, while these people were designated beneficiaries, they are not treated as contingent beneficiaries should the actual beneficiary disclaim. Instead, the death benefits would be directed to any non spousal default beneficiary under the plan document, most likely the participant’s estate or his children. Accordingly, she should not disclaim until absolutely certain where the death benefits would go, and the nephews would only receive the benefits if the estate was the default beneficiary and participant’s will (or possibly state intestate provisions in absence of a will) named the nephews as beneficiaries. Note that if the benefits go through the estate due to spouse’s disclaimer and participant passes prior to the RBD, the 5 year rule will apply.