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401k beneficiary vs wife


BonJo

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Any and all advice appreciated!

My mother's husband of almost 12yrs recently died. He had a 401k worth approx $400k. He was always telling my mom that if he ever died, she would be rich. I assume this means that he truly believed his 401k retirement would go to her.

Mom received a call this morning advising her that when her husband set up this 401k account in the early 90s that he listed his oldest daughter as beneficiary, and that my mom would receive nothing.

It's my belief that he assumed the 401k would automatically go to my mother when he died, since they were married.

My mother is trying to get a meeting with an attorney to start seeing about fighting this...but in everyone's opinion, does she stand any chance?

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Was this notification/call from the Plan Administrator, or some flunky at the investment house? You need the Plan Administrator to make the decision.

Assuming that this beneficiary wasn't required under the terms of a prior QDRO or something like that, then your mother should be the default beneficiary under the plan. My guess is that in most situations, she will receive the funds, and may not necessarily need to hire an attorney. However, I'll let some of the attorneys chime in - they have seen the strange and unusual...

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If you have the information contact the plan administrator and ask them how your mother files a formal claim of benefits as the beneficiary.   It will start a process where they will have to tell her they are going to pay you or why they are rejecting the claim.  

If either of you have a copy of the Summary Plan Description it would have this information. 

The other thing this does is put the plan on notice there is a spouse at the time of death.  There are rules regarding when someone besides a spouse can be the beneficiary.   If they think there is a spouse they are going to make sure those rules are followed.  

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Almost definitely this plan does not provide a normal form of payout as an annuity but as a lump sum; therefore, it is REQUIRED BY LAW that your mother be the beneficiary for 100% of the account and it doesn't matter if a prior beneficiary designation was signed.  I have written articles about this problem (which is disinheriting children of a prior marriage, which might be wanted he wanted), but nonetheless, that is almost definitely the case here.

And even if the plan did provide the annuity as a normal form, than your mom is entitled to at least 1/2 of the account BY LAW.  Now, that assumes that she did not sign any forms after they were married that waived her rights; but if she did, they would have to provide a copy of this form.

Call the employer; ask to speak to whoever administers the plan. Whoever called your mom was talking out of their proverbial ass!

You probably don't need a lawyer (yet); you need to talk to someone in charge of the plan and see what they say.

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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I agree your mother needs to file a written claim for benefits. It would be best to include a copy of their marriage license or other proof of marriage with the claim.  If you can't find the SPD, the plan's Form 5500 filing lists the Plan Administrator (and their address) and is available on the DOL website.

 

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41 minutes ago, Larry Starr said:

... that assumes that she did not sign any forms after they were married that waived her rights; but if she did, they would have to provide a copy of this form.

Please don't overlook this piece of advice.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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Update:

2 attorneys so far are giving my mother the run-around, saying she will get nothing or just a small portion.

I don't suppose anyone here knows a good attorney near Tulsa, OK??

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The attorneys don't decide!  See comments above.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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I am with David here.  Start with the formal written claim for benefits and make the plan formally accept the claim or reject it.  If they reject it than if you want a lawyer who knows ERISA (that is the key for looking into this is find an ERISA attorney) can review why they rejected the claim.  They will tell you the basis upon which they reject the claim.  

There is a good chance however how the plan rules will be the correct answer.  The Plan Administrator and their attorney doesn't have a dog in this fight.  They just want to pay the correct person so they will do their best to pay the correct person. 

.  

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17 hours ago, BonJo said:

Update:

2 attorneys so far are giving my mother the run-around, saying she will get nothing or just a small portion.

I don't suppose anyone here knows a good attorney near Tulsa, OK??

Whose attorneys? Do they work for the Plan Administrator? 

Your mom shouldn't be the one needing an attorney - it would be the other claimants to prove that they are the beneficiary(ies). 

R. Alexander

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18 hours ago, BonJo said:

2 attorneys so far are giving my mother the run-around, saying she will get nothing or just a small portion.

If it hasn't been made abundantly clear from prior responses, your mother is just talking to the wrong people.  There is some possibility that your mother will get nothing, but practically zero chance she will get "a small portion," which tells me these people know nothing and are trying to make her go away.

However - please review and confirm this is a 401(k) and not an IRA.  Unfortunately the terms get mixed up sometimes, especially if someone had a 401(k) and rolled it to an IRA.  If it is an IRA, then it would be easier for your mom's husband to name someone else as beneficiary, depending on state law.

Ed Snyder

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