Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Under ERISA, Beneficiaries May Not Inherit
Old 09-10-2021, 08:59 AM   #1
Full time employment: Posting here.
latexman's Avatar
 
Join Date: Mar 2014
Location: Apex
Posts: 946
Under ERISA, Beneficiaries May Not Inherit

You Could Accidentally Disinherit Your Children Unless You Follow This Obscure Rule

It seems the new, young spouse was not asked to sign a spousal waiver, so the intended beneficiaries/children of the deceased did not inherit the monies in the deceased's 401(k) plan as specified.

Oopsie!

I did not know this.
latexman is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-10-2021, 09:05 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Aug 2016
Location: Northern Virginia
Posts: 5,318
I do not think that is a new rule. But seems there could be a cause of action against the administrator for not following the plan (which requires those sigs).
Montecfo is offline   Reply With Quote
Old 09-10-2021, 09:08 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
MRG's Avatar
 
Join Date: Apr 2013
Posts: 10,835
Quote:
Originally Posted by Montecfo View Post
I do not think that is a new rule. But seems their could be a cause of action against the administrator for not following the plan (which requires those signs).
+1
This isn't new it's how it works. Sounds like a great example of people not understanding the process. Too bad, perhaps they should have asked questions and followed advice.
MRG is offline   Reply With Quote
Old 09-10-2021, 09:12 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Aug 2016
Location: Northern Virginia
Posts: 5,318
Of course the purpose of such rules is to protect dependent spouses, a good objective.
Montecfo is offline   Reply With Quote
Old 09-10-2021, 09:22 AM   #5
Full time employment: Posting here.
latexman's Avatar
 
Join Date: Mar 2014
Location: Apex
Posts: 946
Quote:
Originally Posted by Montecfo View Post
Of course the purpose of such rules is to protect dependent spouses, a good objective.
Agreed, but in the case cited (husband died two weeks after marriage) it sure caught the children by surprise, and makes one wonder, what was the intent of the deceased?
latexman is offline   Reply With Quote
Old 09-10-2021, 02:50 PM   #6
Thinks s/he gets paid by the post
iloveyoga's Avatar
 
Join Date: Jan 2017
Location: Des Moines
Posts: 1,223
Retirement Equity Act of 1983 or 1984?? Old memories.
__________________
Retired in 2013 and we are living the dream!
iloveyoga is offline   Reply With Quote
Old 09-10-2021, 03:19 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 8,782
Yeah, I knew that when I signed up for my first 401K
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is online now   Reply With Quote
Old 09-10-2021, 10:42 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 12,303
Hope I never have to deal with this, but thanks for the info. I guess the whole process could get a bit sticky. Imagine a second marriage and when all the guests are gone from the reception, etc., the couple heads up the stairs. There on the pillow is a waiver for the new 2nd wife to sign - before consummation takes place. Otherwise...
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is online now   Reply With Quote
Old 09-11-2021, 05:41 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 10,874
I wasn't aware of that. That is a terrible catch 22. It could screw up any marriage new marriage if the 401K owner dies suddenly after the marriage.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 09-11-2021, 05:47 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Aug 2016
Location: Northern Virginia
Posts: 5,318
Quote:
Originally Posted by Koolau View Post
Hope I never have to deal with this, but thanks for the info. I guess the whole process could get a bit sticky. Imagine a second marriage and when all the guests are gone from the reception, etc., the couple heads up the stairs. There on the pillow is a waiver for the new 2nd wife to sign - before consummation takes place. Otherwise...
Well, of course after exercising such leverage, YMMV.
Montecfo is offline   Reply With Quote
Old 09-11-2021, 07:00 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,588
Quote:
Originally Posted by Montecfo View Post
I do not think that is a new rule. But seems there could be a cause of action against the administrator for not following the plan (which requires those sigs).
I do not agree based on the limited info provided in the article. It is unfortunate turn of events only if, after the new marriage, the deceased intended for the children to continue as the beneficiaries or the new wife. We have no way of knowing. I am not sure there is a "requirement" to notify your HR/Administrator of a new spouse, especially if you are comfortable with the W2 form as on record and the new wife doesn't need health insurance, other benefits etc..... Absent of that, how are the administrators to know they should have his new wife to sign, or not sign the release? Sad situation if he intended for the children to be beneficiaries.

We have a similar situation with MIL's estate right now. The paperwork not being in line with her intentions in both the Will and the Trust. It could go south very quickly and it is likely that the courts would not be able to help. Fortunately, so far, it seems things will work out.
CRLLS is offline   Reply With Quote
Old 09-11-2021, 07:06 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,934
I was aware of this rule for defined benefit plans in that if I elected a single life benefit then DW would have needed to sign a consent... as it turns out we went with 100% joint life so her consent was not needed.

Not anything that I was aware of... but only applies to company plans... not to IRAs... from the article:

Quote:
... Also keep in mind, if you’re in a position to roll your company plan over to an IRA before the marriage takes place, this will solve the problem, since IRAs are not subject to this ERISA rule, and you can safely name anybody as your beneficiary that you wish.

Even after marriage if you are in a position to roll your plan over to an IRA, many (but not all) company plan administrators will not require the other spouse’s permission for you to do so, and once it’s moved to the IRA, you will not be subject to this ERISA rule. ...
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 09-11-2021, 08:16 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,755
yep - the onus is on plan participants to keep up with beneficiary designations, not the plan sponsor
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 09-11-2021, 01:20 PM   #14
Thinks s/he gets paid by the post
iloveyoga's Avatar
 
Join Date: Jan 2017
Location: Des Moines
Posts: 1,223
This rule applies to qualified retirement plans.
__________________
Retired in 2013 and we are living the dream!
iloveyoga is offline   Reply With Quote
Old 09-11-2021, 04:21 PM   #15
Full time employment: Posting here.
latexman's Avatar
 
Join Date: Mar 2014
Location: Apex
Posts: 946
Quote:
Originally Posted by Koolau View Post
Hope I never have to deal with this, but thanks for the info. I guess the whole process could get a bit sticky. Imagine a second marriage and when all the guests are gone from the reception, etc., the couple heads up the stairs. There on the pillow is a waiver for the new 2nd wife to sign - before consummation takes place. Otherwise...
Be careful, if 2nd spouse signs BEFORE consummation, are they legally your spouse? They may later claim they weren’t legally the spouse when they signed, and take all the money!
latexman is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
I am about to inherit $7.5 million! NW-Bound Other topics 51 05-27-2021 01:56 PM
I may inherit lots of money Forced to Retire FIRE and Money 117 09-19-2016 12:33 PM
Noob wondering if it's ok to ask Dad how much I stand to inherit Cuzz Hi, I am... 40 09-04-2008 01:32 PM
Anyone ever inherit land with sibs? FancyBear Young Dreamers 22 08-20-2007 11:44 AM

» Quick Links

 
All times are GMT -6. The time now is 02:24 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.