Does a 401(k) Beneficiary Have to Be a Spouse? – Avoid This Mistake + FAQs

Every year, families are caught off-guard by 401(k) beneficiary rules.

Roughly one in three 401(k) participants haven’t named a beneficiary at all – a risky oversight when over $7 trillion sits in U.S. 401(k) plans.

What happens if you’re married? Does your spouse automatically inherit your 401(k), or can you choose someone else?

Here are five powerful insights you’ll gain:

• Federal Rules Uncovered: Exactly when your spouse is automatically your 401(k) beneficiary under U.S. law – and how you can legally name someone else.
• What to Avoid: The costly mistakes people make (like forgetting spousal consent) that could derail your beneficiary plans.
• Key Terms & Laws Explained: Demystifying ERISA, IRS regulations, spousal consent, and more – know the language experts use.
• Real Examples & Court Cases: Eye-opening stories (and Supreme Court rulings) showing what happens when beneficiary designations clash with spouses and state laws.
• State-by-State Nuances: How living in a community property state (like California or Texas) might affect your 401(k) beneficiary – and why federal law usually prevails.

Quick Answer: Must Your 401(k) Beneficiary Be Your Spouse?

No – your 401(k) beneficiary doesn’t have to be your spouse, but federal law gives spouses special rights.

If you’re married, your spouse is automatically the default beneficiary of your 401(k) when you die. You can name someone else (like a child or other loved one) only if your spouse provides written, notarized consent.

Unmarried 401(k) participants are free to designate any beneficiary they choose. In short, marriage changes everything: without your spouse’s signed waiver, your 401(k) assets will go to your surviving spouse by law.

Key Terms: Beneficiaries, Spousal Consent, ERISA & More

Understanding this topic means grasping a few essential terms and laws:

• 401(k) Plan: A tax-advantaged retirement savings plan offered by employers. You contribute money, often with employer matching, and invest it for growth. Beneficiaries come into play for your 401(k) if you die owning the account.
• Beneficiary: The person(s) or entity you designate to inherit your 401(k) balance when you pass away. A primary beneficiary is first in line, and you can also name contingent beneficiaries (backups if the primary has passed or disclaimed). If you’re married, your surviving spouse is typically the default primary beneficiary unless otherwise specified (with consent).
• Spousal Consent: A written, notarized waiver signed by your spouse agreeing to let you name someone else as the 401(k) beneficiary. This consent is required by federal law for married participants who wish to designate a non-spouse beneficiary. Without it, the plan must pay benefits to the spouse.
• ERISA (Employee Retirement Income Security Act of 1974): A federal law governing private-sector retirement plans (like 401(k)s). ERISA sets minimum standards to protect participants and their spouses. Notably, ERISA mandates spousal protections – ensuring a surviving spouse has rights to the retirement account assets. It also generally preempts state laws related to retirement plan benefits.
• IRS & Internal Revenue Code: The Internal Revenue Service (IRS) oversees tax-qualified retirement plans. The tax code (26 U.S.C. §401(a)(11)) requires that most 401(k) plans automatically provide the surviving spouse as the beneficiary of the account, unless the spouse has consented to another beneficiary. The IRS can disqualify a 401(k) plan (jeopardizing its tax benefits) if these spousal rules aren’t followed.
• DOL (Department of Labor): The DOL also enforces ERISA rules. It ensures plan administrators follow spousal consent requirements and other fiduciary duties. The DOL has clarified in guidance that in “most defined contribution plans, if you die before receiving benefits, your surviving spouse will automatically receive them. If you want a different beneficiary, your spouse must sign a waiver.”
• Community Property States: States like California, Texas, Arizona, and a handful of others have community property laws, meaning spouses equally own marital assets. These state laws can give a spouse rights to half of a 401(k) earned during marriage. However, ERISA’s federal rules override many state provisions for beneficiary designation upon death (more on this in the state nuances section).
• Qualified Domestic Relations Order (QDRO): A court order, often in a divorce, that can split or assign a portion of a retirement plan to an alternate payee (like an ex-spouse), without violating plan rules. A QDRO is an exception to the usual spousal beneficiary rule, because it’s a legal order to divide the account (commonly used in divorce settlements). A QDRO can’t name a new death beneficiary per se, but it can grant a spouse or ex-spouse a portion of the account during a divorce, reducing what’s left to be inherited.
• Plan Administrator/Financial Institution: The company or entity (often a major financial institution like Fidelity, Vanguard, or a plan trustee) that manages the 401(k) plan. They provide beneficiary forms and won’t approve a non-spouse beneficiary for a married participant without seeing the spousal consent form. They must follow federal rules strictly – if they pay out a 401(k) contrary to the rules or valid forms, they risk legal trouble and plan disqualification.

Federal Law: How ERISA Protects Spouses in 401(k) Plans

Under U.S. federal law, your spouse has powerful rights as a 401(k) beneficiary. Here’s how it works:

1. Spouse as Automatic Beneficiary (By Law)

If you are married and die without naming a beneficiary (or if you tried naming someone else without spousal consent), ERISA and the Internal Revenue Code dictate that your surviving spouse inherits 100% of your 401(k).

The law was designed this way to prevent a breadwinner from leaving a longtime spouse penniless in retirement. Unless your spouse explicitly waives their right, they are first in line by default.

2. Naming a Non-Spouse Requires Consent

You can choose someone other than your spouse only if your spouse signs a consent waiver.

This isn’t just a casual form – it must be in writing and typically notarized or witnessed by a plan official. The consent must name the alternate beneficiary (or allow you to change freely) and often cannot be revoked without the spouse’s further consent.

When you fill out your 401(k)’s beneficiary designation form at work, if you indicate a primary beneficiary other than your husband or wife, the form will require your spouse’s signature under a notarized statement.

Without that signature, the designation won’t be valid in the eyes of the plan.

3. ERISA Preemption

ERISA contains a broad preemption clause that overrides state laws relating to employee benefit plans.

That means the federal rules about spousal beneficiary rights generally trump any state law that might say differently.

(For example, even if a state has a law giving half of a married person’s assets to their children or something unusual, an ERISA-governed 401(k) would still follow the federal mandate: spouse gets it, unless waived.)

4. Why These Rules Exist – A Brief History

This spousal protection wasn’t always so strict. It became law after the Retirement Equity Act of 1984, which amended ERISA.

Before 1984, many 401(k)s and pensions didn’t require spousal consent – in some cases, spouses (often widows) were shocked to find out at their partner’s death that someone else was named or the pension was taken as a single-life payout.

Congress acted to protect spouses, requiring the Qualified Joint and Survivor Annuity (QJSA) for pensions and spousal consent for 401(k)-type plans. In short, the law recognized the spouse’s stake in retirement savings earned during the marriage.

5. Enforcement by IRS and DOL

Both the IRS and Department of Labor play a role in enforcing these rules:

• The IRS monitors 401(k) plans for compliance. If a plan paid out someone other than the spouse without proper consent, it’s considered a serious violation. In fact, the IRS notes that failing to get required spousal consent could jeopardize the plan’s tax-qualified status. Plan sponsors who mess up must correct it (for example, by obtaining retroactive consent or providing the spouse an equivalent benefit).
• The DOL ensures that plan fiduciaries (employers/administrators) follow ERISA’s requirements. The DOL can investigate plans and penalize administrators if they do not honor a spouse’s rights. For instance, the DOL would expect a plan to have procedures for confirming marital status and requiring spousal waivers when needed.

Federal law (ERISA, as overseen by DOL and IRS) makes your spouse the #1 beneficiary of your 401(k) by default.

You can only override that with your spouse’s documented permission. These rules apply nationwide, giving uniform protection to spouses in every state for private employer 401(k)s.

State-Specific Nuances: Community Property & Other Rules

While federal law dominates 401(k) beneficiary rules, state laws can still play a role in certain situations.

Here’s what to know about state-specific nuances, especially in community property states:

Community Property States: In nine states (including California, Texas, Arizona, Washington, Louisiana, and others), any income and assets earned during marriage are considered joint property of both spouses.

In theory, that means your spouse owns half your 401(k) contributions made during the marriage. If you were to name someone else as beneficiary, could your spouse claim their half under state law?

Generally, ERISA prevents that at the plan level. For an ERISA-covered 401(k), the plan administrator will follow federal rules (spouse gets it, unless they waived).

However, community property law might come into play outside the plan.

For example, if you somehow managed to name a non-spouse beneficiary without consent and the plan paid them (a situation that shouldn’t happen if the plan followed the rules), your surviving spouse could potentially sue the recipient for their share based on state law.

This is messy and rare – and strong ERISA preemption often stops such claims. In fact, the U.S. Supreme Court in Boggs v. Boggs (1997) held that ERISA overrides a deceased spouse’s attempt to pass their community property interest in a pension to someone other than the surviving spouse.

In that case, the Court made clear the surviving spouse’s rights under ERISA cannot be defeated by state property claims.

Marital status changes and state laws: Some states have laws that automatically revoke beneficiary designations for ex-spouses upon divorce (to prevent an ex from accidentally remaining a beneficiary).

But ERISA preempts those laws for 401(k) plans. For instance, Washington state had such a law, but in Egelhoff v. Egelhoff (2001), the Supreme Court ruled that a deceased’s 401(k) must pay to the named beneficiary (an ex-spouse) despite the state law, because ERISA controls.

If you divorce, you must actively change your 401(k) beneficiary; state automatic-revocation laws won’t apply to ERISA plans.

State Taxes and Estate Processes: One area states do matter is estate procedures if your 401(k) ends up going to your estate (like if no beneficiary and no spouse).

Some states also have inheritance or estate taxes that might be avoided by proper beneficiary naming (especially leaving to a spouse usually avoids taxes due to the marital deduction).

While this isn’t a direct beneficiary rule, it’s a reason to keep your designations up to date to align with both federal and state estate considerations.

Government and Church Plans: Note that not all retirement plans are ERISA-covered. Governmental 401(k)-type plans or certain 403(b) or 457 plans, as well as church plans, might be exempt from ERISA.

Those will follow the specific federal or state laws applicable to them. Some states might impose spousal beneficiary rules on state government retirement plans, for example.

Always check the plan’s own provisions. But for the vast majority of private 401(k)s, ERISA’s spousal requirement is uniform across states.

IRAs vs. 401(k)s (State Impact): Individual Retirement Accounts (IRAs) are not governed by ERISA, so state law can play a bigger role (more on this in the comparison section). For instance, in a community property state, your spouse may need to sign off if you want to leave your IRA to someone else.

Financial institutions often proactively ask for spousal consent on IRA beneficiary forms in those states to avoid disputes. But with a 401(k), federal law already requires spousal consent everywhere, making state-by-state differences less pronounced.

Bottom line: State laws (like community property rights or automatic revocation statutes) have limited effect on 401(k) beneficiary outcomes due to federal preemption.

Your marital status and federal ERISA rules are the decisive factors. Still, be aware of your state’s marital property regime for broader estate planning – especially if you plan to roll over your 401(k) to an IRA or have other non-ERISA accounts.

What to Avoid: Common 401(k) Beneficiary Mistakes

When dealing with who should inherit your 401(k), there are several pitfalls to avoid. These mistakes can derail your intentions and lead to legal headaches or an outcome you never wanted:

• ❌ Not Naming a Beneficiary: Failing to fill out your beneficiary form is all too common (remember, about one-third of people leave it blank). If you’re married, the plan’s default rules will give it to your spouse. That might seem fine – unless you actually intended someone else to share in the funds. If you’re single and leave it blank, it likely goes to your estate, meaning probate court and delays. Always designate at least a primary beneficiary (and update it after major life events).

• ❌ Naming a Non-Spouse While Married (Without Consent): Some people list a child or sibling as their 401(k) beneficiary, not realizing this won’t hold up if they’re married. Never assume you can “secretly” bypass your spouse. Without your spouse’s notarized consent, that designation is invalid under federal law. Don’t put your loved ones in a position to fight over your 401(k) – talk to your spouse and follow the proper consent procedure if you truly want someone else to inherit.

• ❌ Forgetting to Update After Life Events: Life changes fast. Marriage, divorce, remarriage, the birth of children, or the death of a previously named beneficiary – all are triggers to review and update your 401(k) beneficiary. One of the worst mistakes is forgetting to remove an ex-spouse after a divorce. If you don’t update the form, an ex-spouse could end up receiving the 401(k) (and, as noted, state divorce laws won’t automatically save you for an ERISA plan). Likewise, if you marry after having named, say, a parent as beneficiary, be aware that your new marriage likely voids that old designation unless your new spouse consents. Always keep your beneficiary designations current with your wishes.

• ❌ Assuming a Will or Trust Overrides the 401(k) Form: This is a major misunderstanding. Your 401(k) beneficiary form trumps your will. If your will says “I leave everything to my children” but your 401(k) form on file names your spouse (or vice versa), the 401(k) will pay out to whoever is on the form – regardless of the will. Similarly, naming a trust in your will doesn’t affect the 401(k) unless you actually name that trust as the beneficiary on the plan’s form (and again, if you’re married, your spouse must consent to naming a trust if the spouse isn’t the 100% beneficiary). Don’t assume your estate plan covers your 401(k) by default – coordinate them deliberately.

• ❌ Naming Minors or Other Challenging Beneficiaries Without a Plan: While not directly about spouse vs. non-spouse, another mistake is naming minor children outright as beneficiaries. If both parents die, the plan can’t pay a minor child directly – a guardian or trust would have to be involved, causing complications. If you intend to benefit your kids (especially under 18), set up a proper guardianship or trust and consider your spouse’s situation (e.g., you might have your spouse as primary and kids as contingent beneficiaries, or if no spouse, use a trust for minors). This avoids legal delays. And remember, if you’re married, you can’t leave it all to the kids without that spouse’s sign-off.

• ❌ Not Communicating With Your Spouse: If you do plan something unconventional (like you and your spouse mutually agree to leave some retirement assets to kids or others), lack of communication can be dangerous. It’s best that both spouses understand and agree on any waivers. Surprise is never a good strategy – it can lead to contests and hurt feelings. Also, if a spouse signs a consent in the past but circumstances change (marital strain, etc.), they could potentially withdraw consent for future changes. It’s wise to revisit and ensure everyone is still on board or update plans if needed.

Detailed Examples: How 401(k) Beneficiary Rules Play Out

To truly understand the spouse beneficiary rules, let’s look at some realistic scenarios and outcomes:

Example 1: Married, Wants to Name Child as Beneficiary

John is married to Alice. He has a 401(k) worth $500,000. John also has a daughter from a previous marriage, and he wants his daughter to inherit the 401(k) instead of Alice. Can he do this?

Yes, but only if Alice agrees in writing. John fills out his beneficiary form naming his daughter as primary beneficiary. The form prompts Alice to sign a spousal consent waiver.

If Alice signs (witnessed by a notary), John’s daughter will receive the 401(k) when John dies. If Alice refuses to sign, John cannot effectively name his daughter – the plan will default to Alice despite what John wrote.

In practice, if no consent is given, the plan administrator will consider the designation invalid and Alice remains the beneficiary by law.

Example 2: Single, Names a Sibling, Then Marries
Maria is single and names her brother as her 401(k) beneficiary. Years later, she marries Dave but forgets to update her beneficiary form.

Tragically, Maria passes away unexpectedly. Who gets her 401(k)? Dave, the surviving spouse, will get it – not the brother. Even though the form on file says “brother,” federal law dictates that once Maria got married, her spouse is entitled to the 401(k) unless he consented otherwise.

Maria’s prior designation of her brother is basically overridden the moment she had a husband (and she did not obtain any consent from him to keep her brother as beneficiary).

This scenario shows why newly married individuals should review beneficiary forms – Maria could have saved confusion by updating it (either by getting Dave’s consent for her brother or by naming Dave if that’s what she wanted).

Example 3: Married, No Beneficiary Named at All

Lisa is married to Tom. She has a 401(k) but never filled in any beneficiary form. If Lisa dies, it’s straightforward: Tom inherits the 401(k) in full as the default spouse beneficiary.

However, if Tom had also predeceased Lisa or if they died together in an accident, then things turn more complicated.

With no beneficiary (and no surviving spouse), the plan’s default terms apply: typically it would go to her children (if any, in equal shares), or if none, to her estate. That could mean probate court.

This example highlights: if you’re married and simply haven’t bothered naming anyone, your spouse is safe as the recipient, but if you outlive your spouse or they’re not around, you’ve left a mess for your heirs. Always name contingent beneficiaries.

Example 4: Divorce and Remarriage, Old Beneficiary Not Updated

Consider Kevin, who years ago named his then-wife Sharon as 100% beneficiary of his 401(k). They divorce. Kevin never changes the form, perhaps assuming the divorce decree took care of it.

Kevin later marries Julia but still forgets to update the 401(k) form (now years old, still naming ex-wife Sharon). Kevin dies while married to Julia. Who gets the 401(k)?

This one is tricky but illustrates the power of spousal rights: Julia, the current spouse, will likely get the assets – because as a current spouse she never consented to Sharon remaining beneficiary.

Kevin’s old designation of Sharon is essentially ineffective once he remarried, since he did not get Julia’s consent to keep it. The plan administrator, upon learning Kevin was married to Julia at death, should pay Julia.

(If Kevin had not remarried, Sharon as the named beneficiary would have received it despite the divorce, due to ERISA’s preemption of that state law that would otherwise nullify an ex’s claim. That’s exactly what happened in the Egelhoff case – the ex-spouse got the money because there was no current spouse and the form wasn’t changed.)

This example teaches two lessons: update your forms after divorce and understand that a new marriage will override an outdated beneficiary in favor of your new spouse.

Example 5: Both Spouses Have 401(k)s – A Mutual Decision

David and Maria are a married couple, each with their own 401(k). It’s a second marriage for both, and each has adult children from prior marriages.

They agree that each wants their own children (not the new spouse) to inherit their respective 401(k)s. Can they do this? Yes, with proper planning.

David names his son as beneficiary of his 401(k); Maria names her daughter for hers. Then David must get Maria to sign a spousal consent to relinquish her right to his 401(k), and Maria must get David’s consent for hers.

They do so, with all the notarized paperwork filed with their plan administrators. When David later passes, his son gets the 401(k) as intended, and similarly for Maria’s daughter.

If they had skipped the consent step, despite their mutual understanding, the survivor would legally get the deceased’s 401(k) – potentially causing conflict with the stepchildren.

This example shows how spouses can deliberately waive rights in a fair, agreed way, but it requires the right forms.

It’s also wise in such cases for each to document the plan in a post-nuptial agreement or estate plan, but those documents do not substitute for the beneficiary form and spousal consent on the 401(k) itself.

These examples underscore the key principle: the spouse’s rights are paramount unless validly waived.

By planning ahead and using the proper procedures, you can tailor your beneficiary designations to your wishes, whether that involves your spouse or others – but always respect the legal requirements.

Below is a quick-reference table summarizing common scenarios and who inherits the 401(k) in each case:

(Note: The above outcomes assume an ERISA-governed 401(k) plan under typical rules. Always check your own plan’s documents, but these general rules hold in most cases.)

Pros and Cons of Naming Your Spouse as 401(k) Beneficiary

Is it better to keep your spouse as your 401(k) beneficiary, or are there reasons to name someone else (with consent)? Consider these pros and cons:

In many cases, naming your spouse is the simplest and most tax-efficient route due to the special rollover and the lack of red tape. But estate plans are personal – just remember if you choose otherwise, your spouse’s buy-in is legally needed.

401(k) vs. IRA and Others: Comparing Spousal Beneficiary Rules

It’s helpful to compare 401(k) rules to other retirement accounts, since many people also have IRAs or other savings:

• 401(k) Plans (ERISA-covered): As we’ve discussed, if you’re married, the surviving spouse must be the beneficiary unless they consent to someone else. This is a federally mandated rule. Spousal consent is a big deal here. The upside for the spouse is the ability to roll over into their own IRA or even leave the money in the 401(k) for a time (sometimes until the deceased would have turned 72 for required minimum distributions).

• Traditional and Roth IRAs: IRAs are not subject to ERISA’s spousal consent rules. If you have an IRA, you generally can name anyone as your beneficiary without needing your spouse’s approval under federal law. However, state laws and marital property considerations can creep in. In community property states, your spouse could claim a share of the IRA if it was funded with marital assets and you tried to leave it all to someone else. Financial institutions in those states often request spousal consent as a precaution, even though it’s not a federal requirement. In non-community property states, you could technically name a friend or a child as your IRA beneficiary and your spouse might only find out after your death (though that could lead to nasty surprises – not recommended from a relationship perspective!).

• Pension Plans (Defined Benefit Plans): Traditional pensions (the kind that pay a monthly benefit for life) have even stricter spousal protections. If you’re married, pension plans usually must pay out as a joint-and-survivor annuity, meaning your spouse gets at least 50% of your benefit for their life if you die first, unless they consent to waive that form. So for pensions, a spouse not only has beneficiary rights but also rights to the form of benefit. The Retirement Equity Act of 1984 made those spousal annuities standard. Some 401(k) plans that incorporate annuity options follow similar rules, but most 401(k)s avoid this by using the spousal-beneficiary-and-consent approach instead of default annuities.

• 403(b) and 457 Plans: These are similar to 401(k)s but for nonprofits or government. 403(b) plans offered by private nonprofits (like hospitals or universities) that are ERISA-covered will have the same spousal beneficiary rules as a 401(k). Some 403(b) plans (like those for churches) or 457(b) plans for government employees aren’t under ERISA, and spousal rules can vary by plan or state law. Federal Thrift Savings Plan (TSP) for federal employees, for instance, requires spousal consent for certain things like a withdrawal or loan, and by law the spouse is the default beneficiary unless they waive it.

• Life Insurance Policies: While not a retirement account, life insurance is another benefit where you name a beneficiary. Life insurance is generally not bound by spousal consent rules in most states – you can name anyone. Only if state law specifically requires a spouse to sign off (which is uncommon, except possibly in community property situations) would that matter. But unlike ERISA plans, a spouse doesn’t automatically get life insurance unless named. Some employers, however, may have default provisions. Always explicitly name beneficiaries for life insurance too, and keep them updated (separate from your 401(k) designations).

• Bank Accounts, TOD, etc.: Regular bank or brokerage accounts that have “Transfer on Death” (TOD) or payable-on-death beneficiary designations also generally are not subject to spousal consent by law. But again, community property or elective share laws might entitle a spouse to a portion if they contest it. ERISA isn’t involved there.

The big picture difference

401(k)s (and similar employer plans) have federally mandated spousal protections. IRAs and other accounts give you more freedom to name beneficiaries without automatic spousal rights, but your spouse might still have some claims via state marital property law.

If your goal is to exclude a spouse (current or future) from an account, you might consider how you fund that account (e.g., separate property vs community funds).

Conversely, if you are a spouse worried about being left out, know that the 401(k) is your strongest protection; for other assets, you’d rely on state law or the good planning of your partner.

Who Enforces the Rules? (IRS, DOL, and Plan Providers)

Multiple players ensure that the “spouse-as-beneficiary” rules for 401(k)s are followed:

• Plan Administrators and Financial Institutions: These are the front-line. Companies like Fidelity, Vanguard, T. Rowe Price, or an employer’s HR benefits office, who manage your 401(k), have systems in place to collect and honor beneficiary data. They typically design the beneficiary forms with clear fields and spousal consent sections (if you indicate you’re married). They also usually require proof of marital status (when you start the plan or at distribution) – for instance, if their records show you as married and you try to name someone else without the consent form, they will flag it. Upon a participant’s death, the plan administrator will request documents (death certificate, marriage certificate, etc.) to verify the rightful beneficiary. These institutions have a fiduciary duty under ERISA to pay the correct person, so they are quite strict about following the rules to the letter.

• Internal Revenue Service (IRS): From a regulatory standpoint, the IRS ensures that the plan’s tax-qualified status is maintained. Spousal beneficiary rules are part of the tax code for qualified plans. During IRS audits or the plan qualification process, the IRS can check that the plan’s written document includes the required spousal provisions. They also have correction programs for plans that realize they made a mistake (for example, if a plan accidentally paid someone other than the spouse without consent, the IRS expects them to fix it or pay penalties). In essence, the IRS holds the “carrot and stick” of the plan’s tax benefits to make sure those spousal rules aren’t just lip service.

• Department of Labor (DOL): The DOL can investigate participant complaints. Imagine a scenario: a widow was supposed to get her husband’s 401(k) but the company erroneously gave it to someone else. That widow can complain to the DOL. The DOL could then step in and enforce ERISA’s protections, possibly taking legal action against the plan fiduciaries for breach of duty. The DOL also provides education – such as publishing FAQs for workers – to make these rights known (as quoted earlier, DOL’s own materials plainly say if you want to name someone else, your spouse must consent). So, the DOL is like the watchdog for the worker’s rights, which include the spouse’s survivor rights.

• Courts: Ultimately, if disputes arise, courts enforce the rules. Beneficiaries or spouses sometimes sue plans or each other. Federal courts interpret ERISA and the plan documents to resolve who should get the money. As we’ll see in the next section, some landmark court rulings have definitively settled that ERISA’s process must be followed – meaning the plan pays according to its forms and federal law, even if someone else feels entitled. Courts also handle QDROs in divorces, and whether those orders meet the legal requirements to assign part of a 401(k) to an ex-spouse.

In summary, the system is set up so that it’s actually hard to circumvent these spousal rules without raising flags. From the plan level up to federal regulators, there are checks to ensure your spouse is protected (unless they knowingly waive the right). As a plan participant, you should feel confident that if you are the spouse, your rights are safeguarded; and if you’re the account owner, you know the proper steps if you intend a non-spouse beneficiary.

Court Rulings: Key Cases on 401(k) Beneficiaries and Spouses

Over the years, several important court cases have clarified how 401(k) and other ERISA-plan beneficiary rules work, especially when there’s conflict between a spouse and someone else.

Here’s a quick recap of the most relevant rulings:

• Boggs v. Boggs (1997): This Supreme Court case involved a Louisiana family where the first wife tried to leave her share of her husband’s pension to their sons (via her will). After she died, the husband remarried, then he died, and the second wife and the sons fought over the pension. The Court held that ERISA preempts state community property law that would have given the sons a piece. The surviving spouse (second wife) had the right to the pension benefits under ERISA. Key takeaway: A spouse’s ERISA-protected right cannot be undermined by state property claims – the surviving spouse gets priority.

• Egelhoff v. Egelhoff (2001): David Egelhoff had a pension plan and life insurance, and named his then-wife as beneficiary. They divorced, and shortly after, David died without changing the beneficiary. His children (from a prior relationship) argued a Washington state law revoked the ex-wife’s beneficiary status upon divorce. The Supreme Court ruled that ERISA preempted that state law, so the plan had to pay the named beneficiary (the ex-wife). Key takeaway: If you want to remove an ex-spouse as beneficiary, you must do it through the plan documents – a state statute won’t automatically do it for an ERISA plan. Also, if there’s no current spouse at death, an ex who remains named can indeed collect.

• Kennedy v. Plan Administrator for DuPont (2009): William Kennedy had a DuPont savings plan (like a 401(k)). He named his wife Liv as beneficiary. They later divorced, and in the divorce decree Liv waived her rights to William’s retirement plan. However, William never updated his beneficiary form (Liv was still listed). When William died, DuPont’s plan administrator paid the account to Liv (since she was still the designated beneficiary). William’s estate sued, saying Liv had waived it in divorce. The Supreme Court unanimously decided that the plan administrator did the right thing: the plan must follow the beneficiary form on file. The divorce waiver did not remove Liv on the plan’s records, and ERISA lets the plan rely on its documents. (Liv’s waiver wasn’t a QDRO, which could have directed the funds elsewhere.) Key takeaway: Always keep your beneficiary forms current. Even a signed divorce waiver won’t stop an ex-spouse from getting the 401(k) if they’re still the named beneficiary in the plan’s paperwork. Plans are supposed to pay per the form, period. (It’s possible the estate could then try to enforce the waiver against the ex-spouse personally, but that’s a separate matter; the plan itself won’t sort that out.)

• Hillman v. Maretta (2013): Although this case was about a federal life insurance policy (FEGLI) and not a 401(k), it echoed similar themes. A man’s ex-wife remained the named beneficiary on his federal life insurance, despite a state law that, like in Egelhoff, voided such designations after divorce. The Supreme Court again said the federal beneficiary designation rules preempt state law, and the ex-wife got the insurance payout. Relevance: It reinforces that for any governed plan or policy, the named beneficiary form is king, and state laws that say otherwise are usually overridden. This parallels the 401(k)/ERISA situation.

• Local Cases on Waivers and Consent: There have been numerous lower court cases where, say, a spouse didn’t properly consent or a consent was forged, etc. In those cases, courts often side with the surviving spouse if something was amiss with the consent. For example, if a consent wasn’t notarized as required, a court could find the non-spouse designation invalid. The general pattern: courts uphold the formalities. If the rules say “notarized spousal signature required” and that didn’t happen, the court won’t consider the designation effective. In contrast, if all rules were followed, courts uphold the outcome even if it seems harsh (like paying an ex-spouse because the participant never changed the form).

These rulings collectively emphasize a few points:

• Keep beneficiary designations updated (to avoid unwanted outcomes like an ex getting the money).
• Follow the legal formalities (like spousal consents) to the letter.
• Recognize that ERISA’s framework is very strong – it will override conflicting state laws or informal agreements in almost every instance.

Knowing these cases can give you confidence that the rules aren’t just abstract – they’ve been tested in court. If you handle your beneficiary designations properly, the law and the courts will back up your intentions.

FAQs: 401(k) Spousal Beneficiary Questions

Q: Does my spouse automatically become my 401(k) beneficiary?
A: Yes. If you are married, your spouse is by default the primary beneficiary of your 401(k) under federal law, unless they officially consent to someone else.

Q: Can I name someone other than my spouse as my 401(k) beneficiary?
A: Yes, but only with your spouse’s written, notarized consent. Without your spouse’s consent (and signature), any non-spouse designation will be overridden in favor of your spouse.

Q: I’m not married. Can I name anyone as my 401(k) beneficiary?
A: No (because as an unmarried person you have no spouse). You are free to name any person or entity as beneficiary when you have no spouse.

Q: Do these spousal rules apply to IRAs as well?
A: No. IRAs are not governed by the same federal spousal consent rules. In most states, you can name anyone to your IRA. In community property states, your spouse may have to consent or could claim a share.

Q: What if I don’t name any beneficiary on my 401(k)?
A: If you’re married, your spouse will typically inherit by default. If you have no spouse, the plan will use its default hierarchy (often children, then estate), which can lead to probate delays.

Q: Can my spouse refuse to consent to my naming someone else?
A: Yes. Your spouse has the right to refuse. If they don’t sign the consent, you legally cannot bypass them – they’ll remain the beneficiary despite your wishes.

Q: If I divorce, is my ex-spouse still my beneficiary?
A: Yes, until you change it. A divorce doesn’t automatically remove an ex under an ERISA 401(k). Unless a QDRO or plan change occurs, whoever is on the beneficiary form (even an ex) could get the money if no current spouse is in place.

Q: We’re in a community property state. Does my spouse get half no matter what?
A: Yes, effectively. Under ERISA, your spouse is entitled to 100% unless they waive it. Even in community property states, ERISA’s rule holds for the plan payout. A spouse could otherwise later assert a claim on the portion that was community property, but the plan itself will pay the spouse first by law.

Q: Can a will or trust override my 401(k) beneficiary choice?
A: No. Whoever is listed on the 401(k) beneficiary form will get the money. A will or trust provisions won’t change the plan’s payout, so make sure your beneficiary form reflects your actual intent.

Q: Is spousal consent needed for every 401(k) withdrawal or loan too?
A: Sometimes. Some 401(k) plans require the spouse to consent to large distributions or loans as well, especially if the plan is subject to joint-and-survivor annuity rules. It depends on the plan terms, but for simply naming beneficiaries, spousal consent is definitely required if naming a non-spouse.