Naming minor as primary beneficiary?

[John A]

Provided the plan document does not specifically prevent it, is there any reason a single parent enrolling in a 401(k) plan could not designate the participant's child as the primary beneficiary and the participant's parents as contingent beneficiaries? The participant's child is still at the toddler stage and the participant's life insurance would not allow the participant to designate a minor as the primary beneficiary.

Any other suggestions about how to handle this designation (does the designation need to name a legal guardian in case of the participant's death)?

[Alan Simpson]

While I am not an attorney why not have the participant create a will in which a trust is created to take care of any minor children until such time as they become adults. This trust could then be named as primary beneficiary of the retirement plan/life insuarnce/etc.

All parents should have a will if they have children, if nothing else, just to designate the guardian of their child(ren). The addition of a "trust" within the will should not be that much more expensive.

[KIP KRAUS]

John:

I agree with Alan that it may be best to take care of this cituation in a will. In addition,if you haven't already done it, you should checked the distribution section of the plan to see if there are special distribution rules applicable to Minors and Incapacitated Persons. Our plan addresses this cituation and it gives use options as to who we deem payment should go to if beneficiary is a child or incapacitated person. Most plans I've been involved with over the years address this payment issue.

By the way. What kind of insurance policy will not allow the participant to name a minor child as beneficiary? Is this a state insurance department regulation? Our employees may name anyone as beneficiary under our group life insurance plan except the Company.