Plan Administrator Revoked all Prior Beneficiary Designation Forms

[traveler]

I have been told by the Plan Administrator of a governmental thrift plan (similar to a 401(k) plan) that it decided to collect new beneficiary designation forms. It supposedly sent a letter in 1998 to all participants, including retirees, advising them that the prior beneficiary designation forms were revoked, and that if the individual did not submit a revised form, then the terms of the plan would apply. The plan provides that the beneficiary is the spouse, if surviving, then the estate.

Has anyone heard of a plan doing such a thing? Was that action in the best interest of the participants?

In my client's situation, the Plan Administrator is telling us that the 84 year old aunt did not return the correspondence in 1998, so she had no named beneficiary, and payment must go to the estate. The Plan Administrator's position is that the beneficiary designations signed at the time of the participant's retirement were revoked by its 1998 correspondence.

Oh, and, by the way, the plan administrator also mentioned that the 2000 correspondence from the record keeper that said that minimum distributions are based on the niece as beneficiary does not matter, since the beneficiary for minimum distribution purposes could be different than that for death benefit purposes.

Just wondering if anyone has heard of other Plan Administrators doing this.

[MWeddell]

Deborah,

No, I've never heard of that. Without a plan amendment, it doesn't sound valid and even with a plan amendment, it strikes me as questionable if the original beneficiary designation form didn't reserve to the employer or plan administrator the right to revoke the beneficiary designations.

It is fairly common to resolicit beneficiary designations for all participants, such as if a plan switched recordkeepers and the new recordkeeper tracks beneficiaries so that the employer no longer has to do this internally. However, I don't recall anyone saying that the prior forms are voided even when the participant fails to submit a new one.

Michael