Distribution to the Wrong Beneficiary

[BTH]

Yes, a death distribution was made to the wrong beneficiary. In 2010, a participant passes away and his wife receives a distribution of the participant's account, per the beneficiary designation form that both the employer and TPA firm had on file. A year goes by and the employer then comes across a much more recent beneficiary form in which the participant names his two children as primary beneficiaries. The spousal consent signed by his wife was witnessed by a Notary and appears valid.

Any thoughts on how to handle this situation? The only similar topic that I can find is with a distribution overpayment and to try to get his wife to return the overpayment. But, realistically, she won't be inclined to return the funds, especially after a year has gone by.

Thanks for any help.

BTH

[Guest Sieve]

If you're convinced that the newly-discvovered form is valid, then , if you can't get funds returned by wrong beneficiary, the employer/administrator will have to make the plan whole so that the proper beneficiary can be paid out.

[Peanut Butter Man]

Are the children minors and the wife is their guardian? It might make it easier for the plan sponsor to recover the money from the wife under a fraud theory under state law.

[MSN]

Have you checked the plan document to see if forms provided to the Plan Administrator following the participants death are valid?

[BTH]

In this case, the correct beneficiaries are not minors and the more recent beneficiary form certainly appears valid. Assuming that the wife does not return the funds, the "make the plan whole" option makes sense, but is naturally not an option the client will want to do. Definitely a mess.