People are living longer than ever and often working for multiple employers. We may change cities and states over the years. Sometimes we are married more than one times and may forget plan assets of ex-spouses. And, sometimes we e-sign 401(k) account documents, and are not sure how to change them.
ERISA Preemption
ERISA is a federal law that preempts state divorce and probate decrees. It was established in 1974 and established most 401(k) plans. Because of that, beneficiary designations made by employees in the retirement plan will govern even after divorce. The automatic revocations in 40 states for life insurance, IRAs, bank accounts and tenancy by the entirety property designations do not affect 401(k)s.
Sometimes we forget who we have listed as beneficiaries. Divorcing clients must obtain a qualified domestic relations order and execute it with the plan custodian. The employer plan will have its own custodian. As an employee, you can choose a financial institution (bank or brokerage company) to receive the 401(k) funds. Once there is a sending and receiving custodian the employee can enjoy a nontaxable custodian to custodian rollover.
What can you do with a 401(k) in your estate plan?
Start with determining from the plan custodian how many beneficiaries can be named on the 401(k) account. Find out how much detail about the beneficiaries must be provided. Then percentage of distribution can be decided for each beneficiary and the distribution decided if one beneficiary predeceases. A financial institution may require separate accounts during a plan holder's lifetime for each beneficiary. The new rollover account for beneficiary will be in the name of the deceased "for benefit of" the beneficiary. Most beneficiaries must liquidate and pay tax within ten years.
Lost and Found Databases
If you cannot find your account(s) you can search under your social security number and name. It is best if you have the precise name of the original company.
Here are some current databases:
VA Insurance Database: VA Life Insurance Veterans Affairs Search Results
National Registry: National Registry (unclaimedretirementbenefits.com)
Privately Operated ERISA: Benefits Pro
US Department of Labor: (dol.gov)
US DOL backpay: Workers Owed Wages (dol.gov)
US DOL bankrupt companies: Form 5500 Search (dol.gov)
Pension Benefit Guaranty Board: Missing Participant Program (pbgc.gov)
Life Insurance Policies: www.naic.org
Unclaimed property: www.missingmoney.com
If you would like assistance with your accounts and beneficiary designations, please call 307,200.1914.