Beneficiary Designations Involving Minors -- Prohibit or Invalidate?

[Guest GmcyWT]

Would it be unusual to add a restriction to pension and other retirement plan documents and/or beneficiary designation forms regarding minor children (i.e., a provision prohibiting the designation of minor children as beneficiaries, and possibly requiring the designation of a legal guardian of the child's property (which may not necessarily be a parent or guardian of the child him/herself))?

Others in the forum have noted that they try to make sure that beneficiary designations are not done naming minor children (specifically addressing this in the beneficiary instructions), but it seems that this would be very difficult to monitor (even if it were possible to review hundreds or thousands of beneficiary designation forms on an individual basis).

Any thoughts on best practices or other approaches (e.g., plan provision stating that designation of minor beneficiary is automatically void) would be most appreciated.

[Bird]

I don't see the need for such a restriction and in fact I think it would be pretty awful ("worst practice") to deem a designation void just because it involves a minor. (Why is it considered a problem?)

Our plans say this, and I'd guess even if they didn't state law would say something similar to allow payouts without too much hassle:

If a distribution is to be made to an individual who is either a minor or legally incompetent, the Plan Administrator may direct that such distribution be paid to the legal guardian. If a distribution is to be made to such person and there is no legal guardian, payment may be made to: (i) a parent, (ii) a person holding a power of attorney; (iii) a person authorized to act on behalf of such person under state law, or (iv) the custodian for such person under the Uniform Transfer to Minors Act, if such is permitted by the laws of the state in which such minor resides. Such payment shall fully discharge the Trustee, Plan Administrator, Trust Fund, and the Employer from further liability on account thereof.