401K beneficiary

[dimondb]

We reside in CA. My ex has me as beneficiary of his 401 converted - IRA account which was established five years before his re-marriage two years ago. He has assured me that has not changed. No further funds have been added to this account for over five years, just accrued interest. If he were to die would I still be considered the "sole" beneficiary as described in this account beneficiary card since this was "our" property prior to marriage? We have kept this money together over 20 years, I have a court order for the 50/50 divison of this account (divorce), but we chose to continue and let these funds accumulate. Since the remarriage I wondered about the probate laws governing the spousal authority even though she is not on the account, just his name and my name?

 

[advisor10]

3-9-2002

DEAR DIMONDB:

The laws concerning distribution of 401K money is federal law that will override probate law. The requirements are that the 401K money MUST GO TO THE CURRENT SPOUSE, no matter what the beneficiary designation form says (I'm sorry to be the bearer of bad news, but better you should find out now so you can take corrective steps to protect this money for yourself).

However the current spouse can sign a waiver to relinquish this money to whoever your husband designates as beneficiary. Perhaps he could be persuaded to ask this spouse to sign the waiver in exchange for some other consideration (money or property left in his will).

You need to discuss this matter with your ex-husband, and also consult with an attorney who is experienced in 401K matters, or get guidelines from any human resources/personnel department 401K expert at a local employer/large company who might also be able to advise you on what to do.

SINCERELY,

advisor

 

[advisor10]

3-18-2002

I asked for a second opinion about your question and I wanted to pass on the information to you:

"If you are the sole named beneficiary of your husband's account, then you will be the only one who gets a distribution if he were to die.

However, there are a couple of facts you bring up that have me concerned. The federal rules governing IRAs allow the IRA's owner to change his beneficiary at any time without the beneficiaries' consent, even if the beneficiary is the spouse. I believe (although I am not 100% sure) that his rule applies to rollover IRAs from qualified plans. Accordingly, your ex-husband could always change his beneficiary to someone else--unless you let the IRA's trustee know of your court order.

I don't quite understand why you haven't served your court order. You say you want the money to keep accumulating--you can simply put/transfer your share of the money in your own IRA account and let it accumulate there. Also--as the arrangement is set up right now--if you pre-decease your ex-husband, he gets all the money. You don't have the right to choose any other beneficiaries. If you serve your court order, and set up an account in your own name, you will be able to name your own beneficiaries.

I can't comment on the implications of California probate laws--as I'm not a California divorce/estate attorney. You may want to post a question on an estate board to see how California treats IRAs with non-spouse (or former spouse) as beneficiary."

SINCERELY,

advisor