Pureto Rico Death Distributions

[Guest BPC]

Our 401(k) plan has a Puerto Rican employee who passed away. He has a beneficiary designation on file with us naming his 2 brothers as beneficiaries. The employee was never married.

A son has suddenly appeared, claiming Puerto Rican law requires any benefit to be paid to the estate (and therefore him), overriding any written designation and is claiming if we had paid the benefit to the named beneficiaries we (plan sponsor) would be responsible and would need to pay twice - once to the named beneficiaries and once to the estate to correct the mistake.

Is anyone familiar with this law, and does it involve benefit plans, life insurance and personal property? Thank you!

[Guest b2kates]

No, I am not familiar with the law. However, I assume that this is a US ERISA qualified 401K. ERISA would override and payment is to the designated beneficiaries.

Have the "son" direct you to the statute; but I do not believe that it overides the ERISA rules.

[mbozek]

ERISA section 514(a) generally preempts all state laws. Section 3(10) defines state to include Puerto Rico.

[david rigby]

What is meant by "...plan has a Puerto Rican employee ..."? Where is/was the EE located? Paid in US dollars? Above answers are correct about ERISA pre-emption.

[Guest BPC]

Thanks everyone. In answer to pax, they are located at our office in Puerto Rico and paid in US Dollars.