An individual has a Marital Settlement Agreement under Wisconsin law. Under the agreement, the individual is awarded all rights and interests in the IRA. The parties agreed to waive, renounce and give up all rights, title and interest in the property awarded to the other. Each party has right to disposes of property as though never married. Individual does not change the beneficiary under the IRA, i.e., the ex-spouse is still the named beneficiary. The individual now dies. Is the ex-spouse the beneficiary of the IRA?

You might want to check out Q&A 127 in the Retirement Distributions column. That analysis would also apply to your situation.

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I am a Wisconsin benefits attorney and I have looked into this issue before. There is a possible conflict between state and federal law. If state law is preempted/ignored, the plan documents, including the beneficiary designation has the ex-spouse receiving the money. The U.S. Supreme court in Boggs v. Boggs held that ERISA preempts state community property law. While not what the parties intended, the Plan may be required to follow the beneficiary designation due to preemption of Wisconsin law. Litigation, if any, over this issue would probably be better in federal court than state court due to the preemption issue.

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Charlie Stevens
Michael Best & Friedrich LLP