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Spousal Claims to Pension Benefits

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Understanding the Legal Background for Retirement Planning

As an employee, you may have a retirement plan sponsored by your employer. Whether you have a have a defined benefit pension plan or a defined contribution retirement plan, the Employee Retirement Income Security Act (ERISA) regulates your plan.

Under ERISA, an employer-sponsored retirement plan should specify the extent of spousal rights to retirement benefits in the event of an employee’s death. Therefore, participating employee needs to understand the benefits not only in relation to oneself, but also in relation to other beneficiaries such as a spouse.

How Do I Claim Survivor Benefits?

How spousal survivor benefits vest depends on the kind of plan that the employer sponsors. To ensure that spousal benefits are available, an employee must notify the employer of any marital status change. If an employee doesn’t have a spouse, it is important to choose another beneficiary under the plan.

How to Receive Survivor’s Benefits under a Defined Contribution Plan?

Under most defined contributions plans (such as a 401(k)), an employee’s spouse gets survivor benefits automatically if the employee passes away before the spouse. If an employee wants to change who receives the benefits, the spouse’s consent in the form of a signed waiver is required. The waiver must be signed in the presence of a witness, such as a notary or the plan’s administrator.

How to Receive Survivor’s Benefits under a Defined Benefit Plan?

Survivor’s benefits are also included in a defined benefit plan unless both spouses choose otherwise. The survivor’s benefit is in the form of an annuity, and it will be equal to at least 50% of the retirement benefits received jointly. Some plans may provide for the receipt of a higher percentage of the survivor benefits.

How Can I Change a Survivor’s Benefits?

There many reasons why one may decide to change the beneficiary for a employer-sponsored retirement plan. Whatever the case may be, as stated earlier, it is important to obtain your spouse’s written consent to include a new beneficiary in the plan. Here’s why:

  • Simply designating another person as a beneficiary your employer’s beneficiary form will not extinguish your spouse’s rights.
  • Through a written agreement, a spouse may give up the right to withdraw consent in the future, making it easier to name new beneficiaries.
  • Waiver is necessary even if you have a prenuptial agreement because a prenup won’t satisfy the waiver requirement.

Ex-Spouse’s Claims to Work-Related Retirement Benefits

As stated above, one must obtain written consent from one’s current spouse in order to include a new beneficiary in an employer-sponsored retirement plan. One must also take action to eliminate an ex-spouse’s claims to the retirement benefits. To extinguish the claims of an ex-spouse, one must remove the spouse from one’s retirement plan.

It is important to remove an ex-spouse from the plan for several reasons:

  • Under ERISA, if an ex-spouse is named as a beneficiary, the plan automatically pays benefits to the ex-spouse.
  • A settlement agreement, divorce decree, or other court order may not fully extinguish an ex-spouse’s beneficiary rights to retirement benefits.
  • Even if state law denies an ex-spouse’s rights to benefits, it may not prevent retirement plan payments to the ex-spouse.

Spousal Claims against Individual Retirement Plans

Besides employer-sponsored retirement plans, many people also have individual retirement accounts. Your spouse’s rights to individual retirement benefits depend on state laws. In a state without community property, one may name a plan’s beneficiary more easily. However, if a state has community property law, half of one’s personal retirement account may belong to the spouse.

Seeking Legal Help

Whether you want to change survivor’s benefits, name a new beneficiary, or understand the claims of an ex-spouse may have on your retirement plan, a qualified pension and benefits lawyer or an estate planning lawyer will be able to help you. For example, a qualified attorney can help to evaluate risks, assess conflicting claims, and develop an estate planning strategy.

Photo of page author Pavel Leshchinskiy

, LegalMatch Legal Content Developer

Last Modified: 08-24-2016 10:23 PM PDT

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