A participant in our retirement plan just passed away. When we were reviewing our files, we were glad to see that he had completed a beneficiary designation form. On closer review, however, we noticed that the form does not have the name of the plan listed. It has his name, details about his intended beneficiaries and even a stamp showing the date we received it from him, but the plan name is missing.
Is there a specific format or required content for a beneficiary designation form? Can we pay out this participant’s account based on a form that doesn’t list the name of the plan?
Many service providers and plan document systems have sample forms that can be used, but there is no special format that is required by law. What is required is that the designation includes information that is specific enough to identify the participant, the beneficiary, and in the event of multiple beneficiaries, how the account is to be divided. If the participant is married and names someone other than his or her spouse as beneficiary, the spouse must sign off (with notary) as consent. The date of the designation should also be evidence so that everyone involved can determine which is the most current.
That brings us back to the name of the plan. This answer really depends on what the form actually does say. If it is clear the form relates to company-provided benefits, the next question is whether or not there are multiple plans that provide for a death benefit, say a retirement plan and a company-sponsored life insurance program. If both are in place, you probably cannot say with certainty which plan the designation on file was intended to address.
If the form somehow indicates that it relates to a company-sponsored retirement plan and there is only one of those, then you probably have enough information to identify all the relevant pieces of the puzzle. But if the company has both a 401(k) plan and a cash balance plan, referring simply to retirement benefits might not be enough.
Ultimately, it is a judgement call on the sufficiency of a designation. If an incorrect determination is made and the rightful beneficiary comes forward, the company is responsible for paying the benefit a second time. It's not a big deal if the death benefit is $1,000, but it could be a huge deal if the benefit is six figures.