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Can one beneficiary form cover 2 retirement plans?


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If you could create a beneficiary form that allowed participants to check the box for applying this primary bene for ESOP and/or 401(k) and this secondary bene for ESOP and/or 401(k) or check the box for "same" and could work it all out in a logical electronic format, can one beneficiary form (actually two within one) cover 2 qualified retirement plans?  

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It will be interesting to see if any of the lawyers have an opinion on this. 

I have not studied the law on this so I am not sure I can cite anything. 

I guess how do you handle something that would most likely be rare but as to be thought about?  I am thinking what if they want to make the spouse the beneficiary for one plan and someone besides the beneficiary for the other plan?  Would the spouse being signing it to cover things? 

I guess I haven't found getting two forms that hard once you have moved to electronic formats for both of them.  We have clients were we handle the 401(k) and ESOP.  We just don't seem to struggle to get one but not the other.  It is more often the struggle is to get even one.  However, once we get one the person is willing to do both. 

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I can see where a participant might balk at having only one form (although the reason for doing so might not be a character endorsement).  ;)

 

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 think the law is agnostic on this.  I don't see any obstacles as long as the form gives a participant as much flexibility as the two plans gives him.  For example, if under the terms of the two plans the beneficiary designation under one plan can be completely different than under the other plan, the form needs to accommodate that.  Strikes me as a messy/confusing form, however.

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Thank you for your replies.  Our ESOP beneficiary form is hard copy and is put in front of new hires at orientation and they get returned back (now and then people refuse).  Our 401(k) form is done electronically at the TPA's website.  So we have forms for the ESOP but typically not the 401(k) because they are done separately and you have to seek out the 401(k) form on your own after you've been auto-enrolled.

My HR department doesn't want to hold and manage ESOP beneficiary forms and while the ESOP and 401(k) TPA is the same company, there are two methods to get beneficiaries set up.  I'm asking these same questions of the TPA.  If we can get an electronic form that 1) provides a record and 2) spits out a report that can be uploaded for both plans to the one TPA, that's what I'm looking to do.

I'll let you know what I learn from the TPA.

Thanks everyone! 

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There is no law that requires a plan to permit beneficiary designations. I've never seen a plan that doesn't permit them, but if you really want to simplify plan administration it is possible (e.g., in all events the beneficiary shall be the surviving spouse, and if no surviving spouse the benefit is payable to the participant's estate, or to the participant's issue per stirpes, etc.)  This might be something to think about at least in the case of the ESOP where the employees are not contributing any of their own money.  

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  • 2 weeks later...
On 6/29/2019 at 5:41 PM, Bob the Swimmer said:

I agree with Mr. Rigby and CardsCrazy. As an example, we have combined ESOPs and 401(k)s for 20 + years---the so-called KSOPs--- and have never had a problem. I don't see any problem if this is properly recorded, administered, and managed in the administrative systems.

Technically, a KSOP is one plan so one form is all that is needed.  It is common for the way they are run they look like two plans but they are just one happy little plan.  

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You might want to ask your ESOP TPA if they can do electronic beneficiary forms.  We have the ability to allow your ESOP clients to get internet access to ESOP data to  our clients and that includes electronic beneficiary forms. 

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