Our 401k plan has many folks who were auto enrolled and never have completed a beneficiary form to self designate where they wanted their balance to be inherited. Our plan states that if no beneficiary form is provided to the plan and death occurs that the participant’s balance goes to first spouse, then children, then state law- so the plan has specific rules if no beneficiary form is in place.

My question is that if someone does not have written beneficiary and relies on plan beneficiary rules, are the persons receiving the balance from the plan based on the plan’s written rules considered “designated beneficiaries” and, have the ability to stretch out their inherited balance in an IRA over their lifetimes- or are they stuck with a five year rule as being determined to be a beneficiary is not the same as being named a “designated beneficiary”. The plan administrator is a monster company and they said that the recipient , even though they are not a named beneficiary by the participant, but are a beneficiary as required under the written plan, would be considered a “designated beneficiary” and enjoy the rights to that designation.

I would like concurrence on this from the Slott team experts please if the guidance makes sense or if , possibly, they could be mistaken. This is a huge issue and I would like to get concurring direction. thanks.