Beneficiary designation with multiple beneficiaries

Interesting question. We don't really handle DB plans any longer, but have a couple of "legacy" plans that we handle, working with an outside actuary, of course. Participant in one plan is VERY old, but still working. Unmarried. Has now designated his children as primary beneficiaries, in equal shares. 

The plan is silent on whether multiple beneficiaries are allowed. The actuary has opined that administratively, it isn't a problem to appropriately calculate and split the death benefit amongst the beneficiaries. 

If the Employer (Plan Administrator) writes up a basic policy stating that multiple beneficiaries are allowed, do you see a problem with it? Seems to me that in the absence of a clear document provision/directive one way or the other, that it should be ok?

P.S. I should have mentioned - these are governmental plans, if that makes any difference in your opinions.

What is the death benefit for a non-married participant?  Is this a contributory plan?  

You should look a the State's law and see if there are any restrictions on the death benefit.  As far as the plan document goes, many states don't even require them, so again, see what the state requires.  

Presumably, it would be an actuarial equivalent benefit with some kind of contingent annuity option that has some form of age restrictions, though it is technically possible to have a joint and survivor annuity with a non-spousal beneficiary but those are rare except in like union or governmental type plans (including firefighter and police officer plans).    

Unless it is a governmental or church plan, it would be governed by ERISA.  If so, it's what the plan document says and not what state law says regarding the beneficiaries.    (I am assuming it is a regular qualified defined benefit plan....  If governmental or church (if non-electing), then look at state...)  What exactly does the plan document state?  Does it have a plan administrator provision permitting the administrator to interpret the plan's provisions?  You might be able to rely on that.  What has it done in the past.... I mean, Is this the first time under this plan someone has had an issue of multiple beneficiaries?  

On 6/17/2025 at 7:38 AM, Belgarath said:

P.S. I should have mentioned - these are governmental plans, if that makes any difference in your opinions.

As a governmental plan, it would be subject to state law.  You might want to look at the authorizing statute for the specific plan you are working on to see if it provides any help. 

For example, here in Texas, Texas Government Code Title 8, Chapters 851-855 provide the rules for pension plans adopted by certain Texas municipalities. Under these provisions, “'Beneficiary' means a person designated by a member, annuitant, or by statute to receive a benefit payable under this subtitle as a result of the death of a member or annuitant."  There is no specific provision under these Chapters that states that a member may designate multiple beneficiaries but it is implied as Section 844.405, which states that a member may designate multiple trusts as a beneficiary "in the same manner and with the same limitations that apply to the designation of multiple beneficiaries.”  In addition, there is no designation of beneficiary provision in the general rules for governmental pension plans.  However, there is a specific rule in Chapter 824 that applies to the Texas Teachers Retirement System, providing that “any member [may] designate one or more beneficiaries to receive benefits ….”  I have not looked at Texas case law in this area, but it seems like the Texas courts would permit multiple beneficiaries under all the Texas governmental pension plans covered by Title 8. 

So… you may have to hunt down the statutory language that applies to your plan and even case law interpreting that language.  Unless there is a statutory provision against permitting the designation of multiple beneficiaries under the plan at issue (and as you say there does not seem to be restrictive language in the plan) and there has not been a prohibition in place for others in the past (so no past practices), it seems it would be easiest to adopt an interpretive rule allowing it.

Just my thoughts as usual…

Thanks all.