“That depends” is often the answer I give when my clients ask seemingly simple questions. My statement is followed by a series of questions that help me answer their original question. Alternatively, I could talk for hours on the myriad of possibilities. Potential death benefits paid by the plan is one of the most frequently asked questions. IRS requirements by type of plan and individual plan provisions dictate the confusion, ummm sorry, specifics. For example, spouses always have rights to benefits in defined benefit plans. Spouses sometimes have rights to benefits in 401(k) plans. Some plans can be more generous and some plans provide larger benefits to the surviving spouse than to the participant.
Whatever your situation may be, here are some items to remember:
- Keep current beneficiary designations on file
- Separate forms for each plan,
- Ensure forms are complete and legible,
- Know the deadlines – some key dates include
- Plan entry,
- When participant turns 35,
- Change in spouse (marriage, divorce or death), and
- Periodic reviews.
- When the spouse waives consent
- Provide the correct documentation
- Ensure proper explanations are provided to the spouse
- The use of a notary is always safest
When in doubt, enlist help from your plan administrator or ERISA counsel.