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Can one beneficiary form cover both the retirement plan and insurance policy?


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If the beneficiary form clearly states the name of the retirement plan and the name of the insurance policy, can the one form be used? A client of ours was trying to cut down on making employees fill out two different beneficiary forms when the employee wants the same beneficiary for both. 

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Is the insurance policy part of the retirement plan, or is it a policy outside of the plan, such as group term life insurance?

Certainly if it is part of the retirement plan, there's no problem. The typical form designates a beneficiary or beneficiaries for the plan benefit, and the life insurance is part of that benefit.

If the life insurance is outside the plan, such as group term, I don't know. While I expect a form could be designed and worded properly to provide for the same beneficiary(ies) for both the plan benefit and the group term benefit, I haven't personally dealt with it, so I will leave that to the folks here who have. Might be more work to design such a form, and easier just to have them sign both - I don't know...

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It is outside of the retirement plan. I was along the same thinking that if permitted, it may be more hassle to design the form than it's really worth. It is a large plan, and while the one beneficiary form would cut down on the forms the participant would need to fill out, we are hesitant because it may not be as clean as keeping the forms separate. 

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If your client considers a combined form to name a beneficiary for two or more plans, suggest your client consider which plans require, as a condition for an effective designation of a beneficiary other than the participant's spouse, a qualified election and spouse's consent .

If not all plans are the same, a combined form should explain which plans require a spouse's consent (or other condition), and which plans do not provide such a requirement.

Also, consider that no matter how carefully a form explains this point, some aliterate participants might mistakenly assume that a spouse's-consent condition, perhaps including an appearance before a notary, is required even when it isn't.

 

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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So you'd have to have 3 forms - one for those who want both benes the same, one for the retirement plan and one for the policy if they want to name different benes.  That sounds like more complexity to me, and as noted above, explaining the conditions and requirements just makes it worse.

Ed Snyder

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Megandps, whatever your client decides to do, make sure you get written approval of your form and procedures from the group insurer before you implement. You should probably talk to them before investing much time in the project. I suspect there could be a problem with using non-insurance company forms. Even beside the fact that you're dealing with, you know, AN INSURANCE COMPANY, ERISA does not preempt state insurance laws and the policy (and possibly related forms) are approved by state insurance department.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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