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roy515

Certain & Life benefit; change in beneficiary

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A single participant retired from a qualified, ERISA DB plan at age 55 with a life annuity with 10 years of payments (120 months) guaranteed. He named his sister as beneficiary. 3 years after the annuity starting date, he got married.

I presume the spouse has no right to the guaranteed benefits if the retiree dies before 120 payments have been made, correct? Any guaranteed payments will go to the named beneficiary (the sister).

Are there any issues if the retiree wants to change the beneficiary? I presume he could contact the plan sponsor to make this change - but I'm not certain if it would violate a code or regulation. I don't believe it would change the benefit amount - as the calculation of the life annuity with 10 years guaranteed does not factor in the beneficiary's age/sex. Does it create a new annuity starting date?

We're assuming the plan document is silent on the matter. It doesn't prohibit a retiree to change the beneficiary after the ASD, but it doesn't specifically allow it either. 

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Spouse has no rights to anything under the law.  Plan may say something different, although unlikely.  The plan may permit the retiree to designate a different beneficiary for the balance of the 10 years' payments due at death, but one would need to inquire.  There is nothing in the law that would prohibit the plan from permitting such a change. You're assuming the plan is silent, but it's probably not really silent.  I would look at the definition of beneficiary and the language relating to the designation of a beneficiary and it will probably lead to a favored interpretation one way or the other. 

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Just now, jpod said:

I would look at the definition of beneficiary and the language relating to the designation of a beneficiary and it will probably lead to a favored interpretation one way or the other.  

But in any event that would be something for the plan administrator to interpret, not the retiree.

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In my observation, most plans do not restrict the retiree from changing the beneficiary in such circumstances.  However, as stated above, plan rules govern.

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Beneficiary Designation Right.  Except as provided in Section XXX and to the
extent the form of benefit so provides, each Participant, and if applicable Beneficiary, shall have the right to designate one or more primary and one or more secondary Beneficiaries to receive any benefit becoming payable upon such individual's death to the extent provided in the Adoption Agreement. All Beneficiary designations shall be in writing in a form satisfactory to the Plan 
Administrator and shall only be effective when filed with the Plan Administrator during the Participant's lifetime (or if the Participant has died, during the lifetime of the Beneficiary of such Participant who desires to designate a further Beneficiary). Except as provided in Section XXX, each Participant (or Beneficiary) shall be entitled to change his Beneficiaries at any time and from time to time by filing written notice of such change with the Plan Administrator. In the event that the Participant fails to designate a Beneficiary, or in the event that the Participant is predeceased by all designated primary and secondary Beneficiaries, the death benefit shall be payable to the Participant's spouse if then surviving, and if not, to the Participant's children in equal shares and if none, to the executor or administrator of the Participant's estate.
 

Check to see if you have this clause in your Plan documents.  Your participant should be able to change his beneficiary at any time, as long as it's in writing to the PA.

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