No Beneficiary Designation On File

[waid10]

Hi. We have an employee that died recently. He does not have a beneficiary designation on file. He is divorced with two children. Our 401(k) plan doc states that absent a designated beneficiary, his account is distributed to a surviving spouse (which there is none), then to children (there are two), then to parents, then to the estate. It appears then that we should distribute to the two children (which are adults).

But he also has a 403(b) account. That plan document says that if there is no beneficiary designated that the account is distributed to the surviving spouse, and if there is none, then to the estate.

So it seems that the two plan docs are not consistent. Can someone fill me in? What does the law say on this? I have looked in 401(a)(9) but haven't found anything helpful.

Thanks.

[Bird]

I think you have to follow the terms of the plan(s). The fact that they're not consistent is not problematic. The kids will probably ultimately get the 403(b) money, just with greater hassle and without the ability to roll over.

[mbozek]

Hi. We have an employee that died recently. He does not have a beneficiary designation on file. He is divorced with two children. Our 401(k) plan doc states that absent a designated beneficiary, his account is distributed to a surviving spouse (which there is none), then to children (there are two), then to parents, then to the estate. It appears then that we should distribute to the two children (which are adults).

But he also has a 403(b) account. That plan document says that if there is no beneficiary designated that the account is distributed to the surviving spouse, and if there is none, then to the estate.

So it seems that the two plan docs are not consistent. Can someone fill me in? What does the law say on this? I have looked in 401(a)(9) but haven't found anything helpful.

Thanks.

Plans do not have to consistent as to who is the default beneficiary if there is no designated beneficiary. MRDs rules do not require that the beneficiary be same person under all plans of the employer. MRD rules require payment to a designated beneficiary but do not specifiy who that party can be. Since there is no spouse, the 403b benfits will be distributed to the employee's estate.