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Welcome to the Retirement Learning Center’s (RLC’s) Case of the Week. Our ERISA consultants regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, Social Security and Medicare. This is where we highlight the most relevant topics affecting your business. A recent call with a financial advisor in Massachusetts is representative of a common question on beneficiary designations.
“I have a client who originally named her then-husband as primary beneficiary and her father as contingent beneficiary on her 401(k) plan. She later divorced that spouse and remarried. Now, she is incapacitated and has no power of attorney, and she did not update her beneficiary form after she remarried. Who is the beneficiary?”
Assuming the plan’s spousal-protection provisions apply, the current spouse generally remains the beneficiary. Here is why.
General Rule
A plan administrator generally determines the beneficiary in accordance with the plan documents and any valid beneficiary designation on file. However, federal spousal-protection rules apply to certain ERISA-covered retirement plans. For many defined contribution plans, the participant’s nonforfeitable account balance must be payable to the surviving spouse unless the spouse consents to the designation of another beneficiary [see Treas. Reg. §1.401(a)-20, Q&A-3].
For an ERISA-covered qualified plan subject to the spousal-beneficiary rules, under IRC §417 and IRC §401(a)(11) and ERISA §205 / 29 U.S.C. §1055, naming anyone other than the spouse as primary beneficiary requires written spousal consent witnessed by a plan representative or notary public. Because the participant remarried and never obtained her new husband’s required consent to retain the ex-spouse as beneficiary on the account, the current spouse generally has priority as beneficiary, subject to the governing plan terms and any applicable QDRO—regardless of the outdated beneficiary form listing the ex-husband as primary beneficiary and the father as contingent beneficiary.
Effect of Incapacity
Because the participant is now incapacitated and has no power of attorney, she may not be able to change the beneficiary designation without an authorized representative. A plan administrator cannot waive the current spouse’s rights. Therefore, assuming the plan’s spousal-protection provisions apply, the current spouse generally remains the beneficiary.
Recent Litigation Support
This spousal protection principle was illustrated in recent litigation, LeBoeuf v. Entergy, 5th Cir. (2025), where the court upheld payment to the second wife under the plan’s spousal beneficiary provisions after the participant remarried. The earlier beneficiary designation naming the participant’s four adult children was ineffective because the second wife had not consented to a nonspouse beneficiary.
What If This Were an IRA?
The outcome for an IRA under similar circumstances would be quite different. IRA beneficiary rights instead generally depend on the beneficiary designation, the IRA agreement, and applicable state law [see Treas. Reg. §1.401(a)-20, Q&A-3(d)]. The new husband would not automatically become the beneficiary merely because of the remarriage. The ERISA/IRC spousal-consent rules that generally protect the current spouse in an ERISA-covered qualified plan do not apply to an IRA.
ERISA’s spousal protection rules may control beneficiary determination in cases involving divorce and remarriage. As a result, prior beneficiary forms naming an ex-spouse or other non-spouse individuals may be overridden by remarriage when the plan’s spousal protection provisions apply, unless the current spouse provides the required consent. Advisors can encourage individuals and plans to conduct annual beneficiary audits to avoid unnecessary confusion. Ask us about our “Build Your Practice” Beneficiary Audit module info@retirementlc.com