In a recent federal court decision, a surviving spouse was found to have no claim to the deceased spouse’s IRA because the surviving spouse was not designated as a beneficiary on the beneficiary form. The assets in the IRA were rolled over from the deceased husband’s pension plan.
ERISA, which commonly refers to qualified plans, such as profit sharing, 401k and pension plans, automatically guarantees that spouses will enjoy survivor benefits, unless, say, for estate planing reasons, those benefits are waived by the surviving spouse. IRAs, however, are not governed by ERISA. In this case, the surviving spouse lost ERISA protection because ERISA ceases to apply when monies are moved from a qualified plan to an IRA.
This decision reminds clients that IRA beneficiary designations must be checked when conducting an estate plan review to assure that the desired beneficiaries have been designated on the form. Otherwise, unwittingly, a surviving spouse might be deprived of desired benefits.
Please do not hesitate to contact us if you have any questions about the case referred to, your estate plan, or the designation of beneficiaries of qualified plan benefits or IRAs.
* * * * *