Your organization offers employees an ERISA-covered retirement plan. You’re adding newly eligible employees to the portal and notice that one employee is married but wants to name their mother as their beneficiary. What would you do next? A. Advise the employee that they need written consent from their spouse B. Tell the employee they must designate their spouse as the beneficiary C. Ask them why they didn’t name their spouse as the beneficiary D. Nothing; the employee can designate whomever they would like to be the beneficiary E. Nothing; the change will be automatically rejected as spouses are automatic beneficiaries
The correct answer and explanation is:
Correct Answer: A. Advise the employee that they need written consent from their spouse
Explanation:
Under the Employee Retirement Income Security Act (ERISA), retirement plans that provide a benefit payable after the participant’s death (such as a 401(k) or defined benefit pension plan) must follow specific spousal protections. One such protection is that the spouse is automatically considered the primary beneficiary of the plan unless the spouse gives written, notarized consent to allow someone else (like a parent or child) to be named instead.
In this case, since the employee is married and wants to designate their mother as the beneficiary, ERISA rules require the spouse’s written and notarized consent for this designation to be valid.
Here’s how the options break down:
- A. Advise the employee that they need written consent from their spouse – ✅ This is the correct step. Under ERISA, spousal consent is legally required if the participant wishes to name someone other than the spouse as the primary beneficiary.
- B. Tell the employee they must designate their spouse as the beneficiary – ❌ Incorrect. While the spouse is the default, the employee can name someone else with spousal consent.
- C. Ask them why they didn’t name their spouse as the beneficiary – ❌ Inappropriate and not required. The reason is irrelevant legally; the issue is whether the correct consent is obtained.
- D. Nothing; the employee can designate whomever they would like – ❌ False under ERISA rules for married participants.
- E. Nothing; the change will be automatically rejected as spouses are automatic beneficiaries – ❌ Incorrect. Plans don’t automatically reject other designations; they require formal spousal consent.
Conclusion: ERISA is clear in protecting the rights of spouses. Employers or plan administrators must ensure these protections are followed by informing employees of the requirement for written spousal consent when naming a non-spouse beneficiary.