contingent beneficiary Contingent beneficiaries with their own specific contingents

[Lisa7267]

Hello.  I a faced with a unique beneficiary designation and my inclination is that it is not appropriate.  The plan document allows for one or more primary beneficiaries to be named and one or more contingent beneficiaries if all of the primaries have predeceased the ppt (or disclaimed).

We received a custom beneficiary designation that names one or more 2nd tier contingent beneficiaries to each of the contingent beneficiaries, meaning that if all of the primaries predecease, then the named contingents do not split the account equally as would normally be the case.  Rather, the participant wants specific 2nd tier contingents to get any predeceased contingents' share.

I can't find any information on this online and I was hoping someone had some prior experience with handling this issue.  Thanks so much.

[My 2 cents]

I am not a lawyer, but:

If properly structured, so that to the extent one or more primary beneficiaries predecease the participant there are others who step in to take their place, unless it violates the terms of the plan (somewhat unlikely) it ought to be acceptable.

Do distinguish this from a situation where it is a beneficiary who designates someone to step in when the beneficiary dies after the death of the participant.  That is not something that the plan is likely to permit.

Example 1:  If PB dies before the participant, then CB1 becomes entitled to 35% of the death benefit when the participant dies and CB2 becomes entitled to 65%.  If the participant, in designating the beneficiary, puts in language making CCB1 entitled to 20% and CCB2 entitled to 45% if PB and CB2 both die before the participant, then I would expect the distribution of death benefits to be 35% to CB1, 20% to CCB1 and 40% to CCB2 upon the death of the participant after the death of PB and CB2.  Why not?

Example 2:  Same details but CB2 survives the participant and PB and then dies, the designation of CCB1 and CCB2 by the participant would not, absent explicit plan language to the contrary, be relevant.  It is also unclear that CB2 would be given the authority by the plan to designate his or her own beneficiaries.  See other recent discussion thread.