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February 18, 2009

Generic Beneficiary Designation Form

Your Guide

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Beneficiary Designation Form

Definition

Document that is used by the retirement account owner to identify the party ( beneficiary) that the retirement account owner wants to inherit assets remaining in the retirement account after the owner’s death.

Retirement plan service providers or plan administrators usually provide a ‘fill-in-the-blanks’ form that retirement account owners can use. However, some will accept customized beneficiary designation forms instead. Retirement account owners who are interested in using a customized beneficiary designation form should consult with the plan administrator or IRA custodian/trustee to determine if they will allow the use of those forms, and whether there are any specific requirements that should be satisfied in order for the form to be ‘acceptable’.

Referring Cite

The retirement plan kit, summary plan description,beneficiary designation form

Additional Helpful Information

  • Failure to designate a beneficiary may result in the beneficiary being determined under the retirement plan’s default beneficiary provision. Retirement account owners usually have the option of designating primary beneficiaries and contingent beneficiaries.
  • Contingent beneficiaries would generally inherit the assets only if the primary beneficiary(ies) predeceases the retirement account owner, unless the beneficiary designation form provides otherwise
  • For qualified plans and ERISA403(b) accounts, the spouse of a married participant must be the sole primary beneficiary, unless the spouse consent’s in writing for someone else to be designated as a primary beneficiary. For IRAs, spousal consent may also be required if the IRA owner lives in a community or marital property state.

Errors and Beneficiary Forms

There have been cases setting precedence that certain errors can be overlooked, when determining the beneficiary of a retirement account, if the intent of the account owner is clear. For instance, we can refer to Metropolitan Life Ins. Co. v. Johnson, 297 F.3d 558 (7th Cir. 2002. In this case, the plan provided that benefits would be paid to the beneficiary named by the owner. When completing the beneficiary designation form, the owner made several errors, which includes:
  • Checking the wrong box for the Plan name. In this case, the form was designed to be used for more than one plan, and the participant would indicate the plan to which the designation applied, by checking the applicable box.
  • The participant listed his mother’s address on the form, instead of his address
  • He indicated his marital status as ‘separated’ instead of divorce, even though he had been divorced for several years.

Both the district court and the court of appeals agreed that the errors did not change the fact that the owner’s intent was clear, which was to designate the person he named on the form as his beneficiary. Accordingly, the courts ruled that the beneficiary change form was effective, notwithstanding the errors.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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