Retirement Products

IRA versus Qualified Plan Beneficiary Rules 

By law, ERISA sponsored qualified plans, such as a 401(k), require the participant's spouse to be the sole designated  beneficiary.¹ In order for a married 401(k) plan participant to name a non-spouse beneficiary, the spouse must waive his or her rights. The waiver must be  in writing, and most plans require that any spousal waiver be witnessed by a notary public. A new beneficiary must be named.

If the retirement plan is a defined benefit pension plan, a married participant's spouse is entitled to a minimum of a 50% survivor annuity upon the death of the participant. If the participant elects any additional forms of benefit, including a lump sum, at service separation, the participant’s spouse must consent in writing to this form of distribution.

IRAs have no such spousal consent rules applicable to them. Therefore an individual can name anyone he or she wants as a beneficiary. However, if the individual resides in a community-property state, the account owner generally must obtain his or her spouse's consent if the applicant has not designated his or her spouse as the primary beneficiary for at least half of the account.