beneficiary (divroce)

Submitted by ShipsnGiggles on Fri, 2014-08-01 17:53

Has anyone ever heard of the following?

401(k) participant got divorced – x-spouse received a portion of his account through a QDRO. nothing strange there) but….

The participant is stating – per the divorce settlement- his X-spouse must continue to remain the beneficiary of his 401(k). He has since remarried – wants to update his beneficiary form to reflect his new wife. He claims he can’t due to the divorce settlement

Note: I have not seen the divorce settlement – this has been communicated verbally.

Does this make sense?

Thanks!



Submitted by Alan - IRA critic on Sat, 2014-08-02 00:26

  1. If the settlement indicates that, there is a serious problem because a divorce settlement cannot override ERISA which requires the current spouse to automatically be deemed the beneficiary of the account unless the current spouse has signed a waiver. I do not believe that the current spouse can be forced into signing a waiver due to the terms of the settlement. Before assuming that the attorney who drafted the settlement was not aware of the ERISA requirement, the decree should be carefully checked. Perhaps the restriction ceased to apply after remarriage of the participant.
  2. If nothing is done and the ex is left as beneficiary of the 401k, if participant passes the current spouse could claim to be the actual beneficiary under ERISA, and would be paid by the plan. The ex might then sue the current spouse to recover the money, but it is not clear whether such a suit would prevail.

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