--- title: Beneficiary Designations - Employer's Perspective description: Understand the critical importance of beneficiary designations in retirement plans and learn best practices for employers to reduce risks and ensure smooth administration. image: https://blog.becpas.com/hubfs/Canva%20images/2026%20Blog%20Graphics%20(169)-Jun-09-2026-05-56-52-4958-PM.png --- [Twitter ** ](https://www.facebook.com/BrownEdwardsCPAs?utm_source=BE+Website&utm_medium=Website+Icon&utm_campaign=BE+Website+Social+Icon&utm_content=Facebook) [Facebook-f ** ](https://www.linkedin.com/company/brown-edwards/?utm_source=BE+Website&utm_medium=Website+Icon&utm_campaign=BE+Website+Social+Icon&utm_content=LinkedIn) [Linkedin ** ](https://www.youtube.com/channel/UC3ReCSn6AFfdQiCUsH4oopA?utm_source=BE+Website&utm_medium=Website+Icon&utm_campaign=BE+Website+Social+Icon&utm_content=YouTube) [Youtube ** ](https://www.youtube.com/channel/UC3ReCSn6AFfdQiCUsH4oopA?utm_source=BE+Website&utm_medium=Website+Icon&utm_campaign=BE+Website+Social+Icon&utm_content=YouTube) [ Client Portal ](https://becpas.sharefile.com/Authentication/Login) [ Make A Payment ](https://becpas.com/payments/) [ Request Proposal ](https://becpas.com/request-for-proposal/) [![logo](https://blog.becpas.com/hs-fs/hubfs/raw_assets/public/BrownEdwards_March2022/images/BE-Logo-old.png?width=378&height=308&name=BE-Logo-old.png "logo")](https://becpas.com/) - 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When they’re missing, outdated, or misunderstood, 401(k) assets can end up delayed, disputed, or paid to unintended recipients, creating stress for families, and administrative and fiduciary risk for employers. Let’s highlight the most common beneficiary-related challenges plan sponsors encounter, and outline practical, proven ways employers can help participants get it right, reduce future problems, and support smoother plan administration. Common Problems with Beneficiary Designation Forms - **Not having the beneficiary designation form on file.** This can be commonly overlooked when employees first sign up for their retirement plan, especially if they do not know all the information needed. Without having a beneficiary listed, the plan’s default rules will go into effect (for example, it will go to a spouse or to the estate). This can also cause an extra administrative burden and fiduciary risk. It can take time and resources to track down rightful heirs and to process probate claims. Additionally, without a clear designee, the chances of competing claims or legal challenges increase. It is important that participants name contingent beneficiary(ies) in addition to primary beneficiary(ies), in the event that the primary beneficiary(ies) predeceases the participant. - **Outdated beneficiary designations after life events.** Major life events: marriage, divorce, having or adopting children, etc. come with many changes. Employees who fill out the beneficiary forms when enrolling often forget to revisit it when they have life changes or if a beneficiary predeceases them. This can have unintended consequences. The plan sponsor must pay benefits to the person listed as beneficiary, even if it is no longer the participant’s wishes. Employers could possibly get brought in* unwillingly* if a family dispute escalates to a lawsuit. - **Divorce or remarriage conflicts.** This has the potential to be the most contentious scenario if there is a divorce or remarriage and the participant forgets to update their beneficiary. ERISA requires that the plan must pay the beneficiary listed on the last valid form. This has been a leading cause of beneficiary litigation. *Kennedy v. Dupont* is perfect example. Kennedy failed to remove an ex-wife as a beneficiary and upon his death the plan paid the ex-wife, even though she had waived her interest in the pension during the divorce. The Supreme Court upheld the decision that the company correctly paid out the benefits according to the plan document. [[1]](https://blog.becpas.com/beneficiary-designations-employers-perspective#_ftn1) Best Practices to Reduce Risk and Help Employees While these issues are common, there are simple steps that can keep employers prepared so that beneficiary designations run smoothly. In plan administration processes, it is important to add a note to review and monitor beneficiary status. Most recordkeepers have a report that will allow employers to see participants and their designated beneficiaries or even see if there is one missing.   | **Enrollments** | | | --- | --- | | *Before Enrollment* |  Inform eligible employees of the information that they will need to complete the beneficiary forms. Name, Date of Birth, Social Security Number, Address, and Relationship, for all primary and contingent beneficiaries.  | | *After Enrollment* | Review forms submitted for accuracy and to confirm that all information has been included. Make sure paper beneficiary forms are dated, as the most current election will apply in the event of the participant’s death.  | | *Auto Enrollments* |  Review forms to ensure that employees have completed beneficiary information.  | | **Major Life Events** | | | *Marriage/ Divorce* |  Have participants review beneficiary information to confirm accuracy.  | | *Birth/ Adoption* |  Discuss with participants to give information about adding a contingent beneficiary. While children cannot claim benefits under age 18, they can be listed as a beneficiary with the proper language.  | | **Other Tips for Efficiency ** | | | *Periodic Reviews* |  Designate a set time, annually or semi-annually, to run a beneficiary report and have participants verify accuracy. Make sure each participant has completed a form.  | | *Plan Document Language* |  Review plan documents to see how former spouses are treated as beneficiaries. Consider language for how former spouses are treated in relation to participant.  | Implementing consistent steps to review beneficiary designations periodically can help protect your participant’s intentions, save time and potential administrative cost, and prevent confusion in the future. If you have any questions about your plan’s beneficiary designation language or forms, please reach out to the Brown Edwards Employee Benefits Service team. --- [[1]](https://blog.becpas.com/beneficiary-designations-employers-perspective#_ftnref1) [Supreme Court Refuses to Enforce Ex-Spouse's Waiver of Plan Benefit | Barclay Damon](https://www.barclaydamon.com/alerts/Supreme-Court-Refuses-to-Enforce-Ex-Spouses-Waiver-of-Plan-Benefit-03-05-2009) Tags: [Tax](https://blog.becpas.com/tag/tax), [Advisory](https://blog.becpas.com/tag/advisory), [Employee Benefits](https://blog.becpas.com/tag/employee-benefits), [Retirement Plans](https://blog.becpas.com/tag/retirement-plans) [Back to Blog](https://blog.becpas.com) ## Related Articles ## [CARES Act Relaxes Qualified Plan And Employee Benefit Rules To Improve Cash Flow For Employer And Employees](https://blog.becpas.com/cares-act-relaxes-qualified-plan-and-employee-benefit-rules-to-improve-cash-flow-for-employer-and-employees) APRIL 8, 2020 [Read More ](https://blog.becpas.com/cares-act-relaxes-qualified-plan-and-employee-benefit-rules-to-improve-cash-flow-for-employer-and-employees) ## [IRS Stops Processing New Employee Retention Credit Claims, Urges Employers to Seek Trusted Tax Professionals for Help](https://blog.becpas.com/irs-stops-processing-new-employee-retention-credit-claims-urges-employers-to-seek-trusted-tax-professionals-for-help) IRS Stops Processing New Employee Retention Credit Claims, Urges Employers to Seek Trusted Tax... 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