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No Beneficiary Form: Now What?

DWC 08/28/18


A participant in our 401(k) plan recently passed away.  His daughter is the executor of his estate and has asked about the process for getting his plan account paid out.  We’ve gone through all our files and cannot locate a beneficiary designation form for the deceased participant.


How do we know who is entitled to receive the participant’s death benefit from the 401(k) plan if no one can locate a beneficiary designation form?


This question comes up quite frequently.  Usually, it is after a benefit has already been paid and is now being disputed, so you are already one step ahead by asking before any payment is made.

Let’s start with touching on several documents that are usually not relevant in making this determination.  Estate planning documents such as wills and prenuptial agreements are typically ignored.  The reason is that they are subject to state laws, while retirement plans are subject to specific federal laws that override the states.

So, where do we look for guidance?  The good news is that plan documents specify what to do in the event the participant did not affirmatively designate a beneficiary.  Usually, the order goes something like this:

  1. Surviving spouse,
  2. Children in equal shares,
  3. Surviving parents in equal shares, then
  4. Estate.

While that seems pretty straight-forward, there are several words of caution.  The passing of a loved one can be quite an emotional situation for all involved, so it is critical for plan sponsors to act in strict accordance with the plan’s provisions and not to allow a heated situation to tempt them into making the wrong determination.  Here are some quick examples.


Oftentimes it is obvious if the participant was married at the time of death and, if so, who the surviving spouse is.  But what if the participant and spouse were separated and pursuing divorce at the time of death?  Unless the couple as truly divorced, the soon-to-be ex is legally still the spouse and, therefore, entitled to the death benefit.

Although same-gender marriage has been the law of the land for a number of years now, there are some whose personal beliefs do not recognize such marriages.  Again, we look to the legal definition of spouse, so if a deceased participant was legally married to someone of the same gender at the time of death, that person is the spouse and must receive the death benefit regardless of the personal beliefs of anyone else involved.

Common law marriage – where the couple never goes through formal wedding proceedings but have simply lived together long enough to be considered married – can throw even more of wrench into the works.


This is another area that can get a bit complicated.  What about step-children or adopted children?  In an adoption the adopter becomes the legal parent of the adoptee, so an adopted child would be recognized for purposes of paying out the benefit.  However, step-children typically are not the legal children of their step-parents and would usually not be considered.

Things can get really messy if there are multiple children and one is estranged.  If the estranged child is still legally a child of the participant at the time of death, he or she is still entitled to a share of the death benefit even though his/her siblings might object.  The reason for the estrangement is irrelevant.

Resolving a Conflict

Even though retirement plans are subject to federal laws, familial status is based on state law.  If there is a question as to the legality of a relationship, it is advisable to consult an attorney for clarification.  In more extreme situations, it is possible to file what is called an interpleader action with the court to ask a judge to make the final decision.  As long as the plan sponsor follows the court’s decision, the company is insulated from liability even if it is later determined that someone else should have received the money.

By taking emotion out of the process and following the terms of the plan document, most beneficiary determinations can be made quickly and smoothly.

For more information on beneficiary designations, please visit our Knowledge Center here, here, and here.

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Topics: Question of the Week (QOTW), DWC, Beneficiary Designation, Spouse


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The views expressed in this blog are those of the authors and do not necessarily represent the views of any other person or organization. All content is provided for informational purposes only and is not intended to be tax or legal advice.