Who Gets the 401(k) if There Is No Beneficiary? – Avoid This Mistake + FAQs
- March 20, 2025
- 7 min read
If no beneficiary is named for a 401(k), the assets typically go to your surviving spouse by default.
If you’re unmarried or your spouse is deceased, the 401(k) balance goes into your estate for your heirs under state law.
This outcome is guided by federal law and the rules of your 401(k) plan. A 401(k) is an employer-sponsored retirement savings plan, and a beneficiary is the person you choose to inherit that account if you die. When a 401(k) owner dies without a designated beneficiary, most plans have a built-in order of inheritance.
Federal Law: Spouse vs. Estate in 401(k) Inheritance
401(k) plans are governed by a federal law known as ERISA (Employee Retirement Income Security Act). ERISA establishes uniform rules across all states for retirement plans, including who should inherit the account if the participant dies.
These federal rules take precedence over any state laws or even instructions in a will when it comes to 401(k) assets. In practice, that means the terms of the 401(k) plan and federal beneficiary rules will determine who gets the money.
Spousal Rights Under ERISA (Married 401(k) Owners)
For married 401(k) owners, federal law provides the surviving spouse with special protections. By default, the surviving spouse is the automatic beneficiary of a 401(k) unless the participant named someone else and the spouse formally consented. This means if you are married and you die without naming a beneficiary (or even if you named a different person without your spouse’s consent), your spouse is first in line to inherit the 401(k).
Plans require a spouse’s written, notarized waiver if the account holder wants to designate a non-spouse beneficiary. In other words, the law makes it difficult to bypass a current spouse unintentionally – these rules are designed to ensure spouses are taken care of by default. (Same-sex marriages are recognized under federal law as well, so a legally married same-gender spouse has the same 401(k) rights as any other spouse.) In practical terms, if a married participant lists someone else as beneficiary without the required spousal waiver, the plan will still pay the spouse as though no other beneficiary had been named.
No Surviving Spouse: Children, Other Heirs, and the Estate
If the 401(k) owner is not married at the time of death (or if their spouse has already passed away), the plan’s default beneficiary rules determine who inherits next. Each 401(k) plan document spells out a fallback hierarchy if no beneficiary is designated. Typically, the next in line would be the participant’s children, sharing the account equally if there are multiple children.
If the person has no surviving children, then the plan might name other close relatives (such as surviving parents or siblings) as beneficiaries. Ultimately, if no eligible family members are identified in the plan’s default order, the 401(k) assets end up being paid into the deceased person’s estate for distribution through probate.
Just because the money goes into your estate doesn’t mean it automatically follows your will. Once in the estate, the distribution follows the terms of your will or, if there is no will, your state’s intestacy law. The key takeaway is that federal law and the 401(k) plan’s terms decide whether the account goes directly to a specific person (like a spouse or child) or flows into the estate for later distribution.
In the vast majority of cases, the plan administrator can determine the rightful recipient(s) simply by following the plan document’s default rules and ERISA guidelines. Only in rare disputes (for example, if multiple people claim the money and the defaults are unclear) would a court need to step in to decide who inherits the account.
Note: The above rules assume a typical private-sector 401(k) covered by ERISA. Non-ERISA retirement plans (such as certain government or church plans) or IRAs might have different default rules, so it’s important to check the specific plan terms in those cases.
State Law Differences in 401(k) Inheritance
Even though federal law decides who initially receives a 401(k) (such as a spouse or the estate), state laws come into play once the money becomes part of an estate. Every state has its own intestacy laws — the rules for distributing property when someone dies without a valid will. If your 401(k) ends up in your estate because no beneficiary was named (and no spouse or other default heir was alive to claim it directly), then these state-specific rules determine which relatives ultimately get the money. This means the outcome can vary depending on where you live, especially in cases where you have a surviving spouse and children.
One major variation is between community property states and common law states. In community property states (like Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), a surviving spouse has a legal right to half of the marital property, including retirement account assets earned during the marriage. However, because a 401(k) already automatically goes to the spouse under federal law, this distinction mostly matters for how any portion that enters probate is divided. In common law states (the majority of states), the spouse’s share of an estate can range from all to a fraction, depending on whether the deceased had children or other close relatives.
Below is a simplified overview of how different state laws might handle a 401(k) that falls into probate (the estate) with no designated beneficiary. For illustration, we focus on cases involving a surviving spouse and/or children, since that’s where state rules differ most.
In general, if there is no surviving spouse, all states give the 401(k) assets to the children. If there are neither a spouse nor children, the funds go to the next closest relatives (parents, siblings, or more distant kin) according to state law.
| State | Intestate Inheritance Outcome (if 401(k) goes to estate) |
|---|---|
| California (community property) | Spouse keeps 100% of community property in the account. Any separate property portion: spouse gets a share (½ if one child, ⅓ if more children) and the children inherit the remaining balance. |
| Texas (community property) | Spouse inherits decedent’s half of community property (unless the decedent had children from another relationship, who would inherit that portion instead). For separate property, if there are children, spouse gets 1/3 and children get 2/3; if no children, spouse inherits all. |
| New York | Spouse receives the first $50,000 of the account value plus half of the remainder; the children receive the other half. (If there are no children, the spouse inherits 100%.) |
| Florida | Spouse inherits 100% of the 401(k) if all the decedent’s children are also the spouse’s children. If the decedent had any child from another relationship, spouse gets half and decedent’s children share the other half. |
| Illinois | Spouse inherits 50% of the account, and the remaining 50% goes to the children (in equal shares). If there are no children, the spouse inherits the entire account. |
Note: These examples are simplified. Each state’s actual intestacy statute has additional nuances and conditions. However, the key point is that states differ in how a surviving spouse and children share assets when no will is present.
For example, many states that adopted the Uniform Probate Code give the surviving spouse the entire estate if the decedent’s children were all with that spouse. But if the decedent had children from another relationship (stepchildren to the spouse), those states generally split the estate between the spouse and the children. Often the spouse gets a large initial portion off the top (e.g. the first $150,000) plus half of the remaining balance, and the children receive the other half of the remainder.
If someone dies with absolutely no living spouse, children, or other relatives, the remaining 401(k) assets (as part of the estate) could eventually escheat to the state (meaning the state government keeps the money). This outcome is uncommon, but it underscores why having beneficiaries or an estate plan is important, even if you think you have no heirs. Even if you have no close family, you can name a friend or favorite charity as a beneficiary to ensure the funds go to a preferred purpose rather than the state.
Example Scenario: No Beneficiary and No Spouse
Imagine a scenario: Jane is a single 401(k) owner who never filled out her beneficiary form. She passes away unexpectedly. Because Jane was unmarried and didn’t designate anyone, her 401(k) plan follows the default procedure. The plan administrator confirms there’s no surviving spouse and no named beneficiary, so Jane’s retirement account proceeds will be paid to her estate.
Now Jane’s 401(k) money becomes part of her probate estate. A court appoints an executor (perhaps a family member) to handle her affairs. The executor must collect Jane’s assets, which includes contacting the 401(k) plan to get the funds released to the estate. This process takes time — often several months or more — because the probate court has to validate Jane’s will (if she had one) or apply state intestacy law if she had no will.
After probate, how is the money divided? Since Jane was single with no children, her state’s intestacy law says her closest living relatives inherit. In Jane’s case, assume her parents are alive. They would receive the 401(k) funds (probably in equal shares) once probate is finished. If her parents were not living, then Jane’s siblings (if any) or more distant relatives would be next in line per state law.
This example shows the consequences of not naming a beneficiary. Jane may have preferred a different outcome (maybe she had a partner or a friend she wanted to leave money to), but because she left the beneficiary blank, the assets went through a lengthy legal process and ended up following the default lineage. It underlines why naming a beneficiary is important — it gives you control and spares your loved ones from added hassle.
Don’t Leave Your 401(k) to Chance: Estate Planning Strategies
Proactive estate planning can prevent the uncertainties and delays that arise when no beneficiary is designated. By taking a few key steps, you can make sure your 401(k) goes to the people you intend with minimal hassle. Here are some strategies to consider:
- Name a primary beneficiary and at least one contingent beneficiary: Fill out your 401(k)’s beneficiary form with a primary choice (e.g., your spouse) and a secondary person (or persons) who will inherit if the primary beneficiary predeceases you.
- Keep your beneficiary designations up to date: Review and update your 401(k) beneficiary after major life changes happen, such as marriage, divorce, the birth of a child, or the death of a previous beneficiary. (Remember: if you divorce, an ex-spouse stays as beneficiary until you formally change it.) Regular annual check-ups are wise to ensure no unintended people are listed.
- Understand the spousal consent rule (especially in second marriages): If you’re married and want to name someone other than your spouse as beneficiary (for example, children from a prior marriage or a relative), your spouse must sign a notarized consent to waive their default rights. Make sure to discuss and document this if it applies to your situation.
- Consider multiple beneficiaries and asset splitting: You are allowed to name more than one primary beneficiary and specify what percentage of the 401(k) each should receive. This can be useful if you want to provide for multiple children or loved ones directly, rather than leaving it all to one person.
- Use a trust for special situations: If your intended beneficiaries are minor children, have special needs, or you want to control how and when the funds are used, you can name a trust as the beneficiary. A properly structured trust can manage the 401(k) assets for your heirs and potentially provide tax advantages, though it adds complexity (so consult an estate planning attorney). Without a trust, a minor’s inheritance would be held by a court-appointed guardian or under a custodial account until adulthood, which may be less ideal.
- Avoid naming your estate as the beneficiary: Unless absolutely necessary, do not list your estate as the 401(k) beneficiary. Doing so forces the account through probate and could accelerate tax obligations. Naming individuals (or a trust) directly usually results in a smoother, faster transfer of funds.
- Coordinate with your overall estate plan: Ensure your 401(k) beneficiary choices align with your will and any trusts. The beneficiary designation will override your will for that account, so if you want certain people to inherit, make sure the forms reflect that intent.
- Be mindful of tax implications for your heirs: A surviving spouse who inherits can roll the 401(k) into their own IRA and continue tax-deferred growth. Non-spouse beneficiaries, by contrast, typically must withdraw the entire account within 10 years (under current federal rules), which can create a significant tax bill. Plan your beneficiaries with these tax rules in mind.
- Consider life insurance for additional inheritance: If you’re unable to name certain loved ones (like children from a prior relationship) as 401(k) beneficiaries due to spousal rights, you could compensate by leaving them other assets. For example, you might purchase a life insurance policy naming those children as beneficiaries to ensure they receive a financial legacy without needing to alter your 401(k)’s spousal beneficiary.
What the Courts Say About 401(k) Beneficiaries: Key Rulings
Over the years, numerous legal battles have been fought over who gets to inherit retirement accounts. Courts have consistently upheld the importance of beneficiary designations and federal rules, even when the outcome surprised the deceased person’s family. Here are a few notable court rulings that demonstrate how these principles play out:
Egelhoff v. Egelhoff (2001): A man in Washington State died after divorcing his wife. He had never removed his ex-wife as the named beneficiary of his employer-provided retirement plan. Washington had a law that would have automatically disinherited an ex-spouse, but the U.S. Supreme Court ruled that ERISA (the federal law) preempted that state law. As a result, the ex-wife, still listed on the beneficiary form, was entitled to the 401(k) (and life insurance) proceeds – not the children. This case affirmed that state statutes cannot override what the 401(k) plan documents say about who the beneficiary is.
Kennedy v. Plan Administrator for DuPont (2009): In this case, a 401(k) owner’s divorce decree stated that his ex-wife would give up her rights to his retirement plan assets. However, he never updated the actual 401(k) beneficiary form, which still named his now ex-wife. The Supreme Court unanimously held that the plan administrator must follow the plan documents on file. Despite the divorce agreement, the ex-wife was legally entitled to the 401(k) because she was still the designated beneficiary according to the plan’s records. This ruling reinforced that only the formal plan beneficiary designation (or a specialized court order like a QDRO) can determine who gets the funds, not informal promises or even divorce court agreements.
Boggs v. Boggs (1997): This case dealt with a family in a community property state (Louisiana). It addressed whether children from a first marriage could inherit part of a 401(k) when their parent died. After the first wife passed away, she had willed her interest in her husband’s retirement plan to their sons. Years later, when the husband died, the second wife (his widow) claimed the entire retirement account. The Supreme Court decided that the second wife was entitled to the benefits, ruling that ERISA overrides state community property rights that the first wife had tried to exercise through her will. In other words, even in community property states, a surviving spouse’s rights under federal law trump any state law claims by other heirs.
These court decisions underscore a clear lesson: you must keep your beneficiary designations up to date and in line with your wishes. Neither state legislatures, divorce decrees, nor unspoken expectations will change who inherits a 401(k) – the law will follow the plan documents. By planning ahead and naming (or changing) beneficiaries properly, you can avoid the unfortunate surprises seen in these cases.
Example Scenario: Remarriage and Unintended Beneficiary Outcome
Consider another scenario: Robert is divorced with two grown children from his first marriage. He later remarries, to Alice. Robert wants his children to inherit his 401(k), so after his divorce he wrote their names as beneficiaries on his 401(k) form. However, he never informed Alice or obtained her written consent to this arrangement.
Sadly, Robert passes away a few years into his second marriage. Alice, as his surviving spouse, is entitled by federal law to the 401(k) benefits because she never consented to being bypassed. Despite Robert’s intention to leave the money to his kids, the plan administrator is required to give the entire account to Alice. Robert’s children receive nothing from the 401(k).
This situation illustrates the importance of spousal consent rules in 401(k) plans. Had Robert properly involved Alice and gotten a notarized waiver, his children could have been the beneficiaries as he wanted. Alternatively, he might have left the 401(k) to Alice (knowing she was the default heir) but used other estate planning tools, like a life insurance policy or separate investments, to provide for his kids. The key lesson is that you must follow the legal requirements (and plan procedures) exactly; otherwise, your wishes might not be carried out.
Weighing Your Options: Pros and Cons of 401(k) Beneficiary Choices
Choosing how to designate your 401(k) can have significant consequences. Here’s a comparison of the pros and cons of different beneficiary choices, including the scenario of not naming anyone at all:
| Beneficiary Option | Pros | Cons |
|---|---|---|
| No designated beneficiary (let default apply) | Spouse inherits automatically if married (federal law protects spouses even without a form). Requires no immediate action or decision on your part. | Likely requires probate if no spouse (slow, public process). Assets may be distributed by generic state law, not personal wishes (could go to relatives you wouldn’t have chosen). Non-spouse heirs have less flexibility with taxes (estate payout is faster and fully taxable). |
| Specific individual(s) (e.g., spouse, child) | Bypasses probate entirely – assets go directly to your chosen person(s) for faster access. You control exactly who gets what, and beneficiaries get maximum tax options (spouse can roll over; non-spouse can use the 10-year withdrawal rule). | Must be kept up-to-date after life changes (an outdated choice could misdirect funds). You cannot impose conditions on the money (beneficiary gets full control upon inheriting). Could cause family disagreements if someone expected to inherit is left out (though legally your designation stands). |
| Trust as beneficiary | Allows control over how and when funds are used (useful for minors or special needs beneficiaries). Can protect assets from a beneficiary’s creditors or irresponsible spending. Useful for complex plans – a trustee manages the money per your detailed instructions. | More complicated to set up (legal costs, ongoing management). If not structured properly, can trigger higher taxes or require faster payout of the 401(k). Still requires spousal consent if you are married (since a trust isn’t a person or spouse). |
| Estate as beneficiary (via your will) | Lets your will direct the 401(k)’s distribution, which may simplify things if you have very specific plans in the will. Executor can use the funds to pay debts or expenses before distributing to heirs. | Triggers probate for the 401(k), causing delays and fees. Often less favorable tax-wise (beneficiaries can’t stretch distributions; they might have to take a lump sum or withdraw within 5 years, leading to a quick tax hit). Requires spousal consent if married, and opens the door to potential will contests affecting the asset. |
In summary, taking control of your 401(k) beneficiary designations is the best way to avoid unwanted surprises. By planning ahead and keeping your information updated, you ensure your hard-earned retirement savings will go to the intended recipients with minimal hassle and maximum benefit. Instead of a court process, your beneficiaries can usually claim the funds by providing proof of your death to the plan administrator, making the transfer smooth and private.
Frequently Asked Questions on 401(k) Beneficiaries and Inheritance
I’m young and single; do I really need to name a 401(k) beneficiary now?
Yes. Unexpected events can occur, and naming a beneficiary ensures your 401(k) will go where you want if anything happens. It’s a quick step that spares your family potential legal complications.
Who inherits my 401(k) if I’m single with no beneficiary?
If you die unmarried with no beneficiary, your 401(k) typically goes into your estate, then it’s distributed to your closest relatives (children, or if none, other family) under your state’s inheritance laws.
Do I need to name my spouse as beneficiary if we’re married?
Legally, your spouse will inherit by default, but it’s still best to name them. Listing your spouse avoids any paperwork confusion and makes sure the plan has their information on file.
Does my will control who gets my 401(k)?
No. A will does not override a 401(k) beneficiary designation. The 401(k) passes according to the named beneficiary or default plan rules. The will only matters if the account ends up in your estate.
What if my 401(k) beneficiary dies before me?
If your primary beneficiary dies before you and no contingent is named, the plan treats it as having no beneficiary. It will then follow the default sequence (spouse, then other heirs or your estate).
Can I name my estate as my 401(k) beneficiary?
Yes, but it’s usually not a good idea. Naming your estate triggers probate for the 401(k) and can cause tax disadvantages. Directly naming individuals or a trust is typically preferable.
Are 401(k) inheritance rules the same in every state?
Mostly yes. Federal law (ERISA) governs 401(k) beneficiary rules uniformly. State differences only affect what happens after the account goes to an estate — each state’s intestacy laws then determine the final distribution to relatives.
Do 401(k) and IRA beneficiary rules differ?
Yes. A 401(k) by law defaults to your spouse (unless they waive that right), but an IRA has no automatic spousal beneficiary. An IRA with no beneficiary goes into your estate and through probate.
How can I leave my 401(k) to my kids from a prior marriage?
If you’re remarried, your current spouse must provide written, notarized consent for you to name someone else (like your children) as beneficiaries. Without that waiver, federal law gives your spouse the entire 401(k) by default.
If I remarry, does my new spouse become my 401(k) beneficiary automatically?
Usually, yes. Upon remarriage, your new spouse would have the default claim to your 401(k) unless they consent otherwise. It’s important to update your beneficiary form after a remarriage to reflect your current wishes.
Can I split my 401(k) among multiple beneficiaries?
Yes. You can name multiple beneficiaries and specify what percentage of the account each should receive (the total must add up to 100%). This way, you can divide your 401(k) among several people or even charities.
Can a 401(k) beneficiary designation be contested?
It’s extremely difficult to contest a 401(k) beneficiary. Courts will almost always honor the official beneficiary on file—unless there is clear proof of fraud, coercion, or lack of mental capacity when it was set.
Can I name a minor (child) as my 401(k) beneficiary?
Yes, but a minor cannot directly receive the funds. A guardian or custodian will be appointed to manage the money until the child reaches adulthood (18 or 21, depending on state law).
How often should I review or update my 401(k) beneficiaries?
At least once a year, and whenever you experience major life changes (marriage, divorce, birth of a child, etc.). Regular reviews ensure your beneficiary designations still match your current wishes.
What is a contingent beneficiary, and should I name one?
A contingent beneficiary is a backup who inherits if your primary beneficiary is unable to (for example, if they pass away before you). It’s recommended to name a contingent to cover unforeseen circumstances.