401k plan beneficiary
Hi:
I have a client who recently remarried. He named his brother as beneficiary of the 401k plan. I was under the impression for this to be valid his “new” wife needs to sign a spousal wavier. Is this a requirement or just a good suggestion? Does the plan document dictate the rules; therefore, if the plan states a surviving spouse has an immediate vested interest the brother is out? Do ERISA rules trump the beneficiary form? Basically, is this an ERISA requirement or should he be concerned only with the rules of the plan document?
Since he is now retired, my suggestion is to rollover the 401k to an IRA and then name the brother. Any insight would be much appreciated.
Permalink Submitted by Alan - IRA critic on Wed, 2018-10-10 22:35
A surviving spouse is the automatic beneficiary of a 401k plan per Sec 401(a)(11)(B)(iii). However, a plan is allowed to adopt a provision that this does not apply until 1 year after the date of marriage. Client would have to inquire whether the plan includes this provision. If not, the spouse inherits. Therefore, if the spouse will not sign a waiver, an IRA rollover would be required sooner or later.