IRS Advises that Revoking Beneficiary Designations on Legal Separation Can Lead to Plan Errors

Automatically revoking a participant’s designation of his or her spouse as beneficiary when the participant is legally separated may cause a plan to violate the spousal death benefit rules, the IRS warns in the September 13 edition of its Employee Plans News.

Noting that some plans are written to automatically revoke a participant’s spousal beneficiary designation when the participant divorces or is legally separated, the IRS warns that legal separation only eliminates the requirement that a participant obtain spousal consent to waive the spousal death benefit and name another beneficiary. The separated spouse must still receive the spousal death benefit unless the participant has waived the death benefit, and designated another beneficiary, the IRS said.

ERIC members and trial members can read more here.
The IRS Employee Plans News is available here.