Do Surviving Spouses Have a Right to a 401(k) or an IRA?

Do surviving spouses have a right to a 401K or an IRA? As you might expect, there are special rules for everything. When it comes to a spouse, the laws make a distinction between a “spouse” versus a “surviving spouse”.

When choosing a beneficiary for a retirement plan, it’s important to understand how your surviving spouse will be treated under the plan. The rules are different for 401(k)s and IRAs. With a 401(k) plan, a surviving spouse is usually the automatic beneficiary of the plan. However, even this must be verified.

If you want to name someone other than your surviving spouse as a beneficiary, your surviving spouse must agree to this in writing.  There are some exceptions. For example, the rule might not apply if the couple was married for a short period of time.

But in general, it’s a strict rule. In fact, even if your surviving spouse signed a prenuptial agreement saying that he or she has no right to your 401(k), that might not be good enough, because he or she wasn’t your “spouse” or surviving spouse at the time of the signing.

IRA Rules Reviewed

On the other hand, this rules are different for IRAs. With an IRA, a surviving spouse is not an automatic beneficiary.  In a recent case, a husband rolled his 401(k) into an IRA after he retired. He named his children as the IRA’s beneficiaries.

After the husband died, his wife had to pursue a claim through the courts. During this process, she claimed she was entitled to the account funds as his surviving spouse. The surviving spouse argued that because her husband rolled his 401(k) into the IRA, she, as the surviving spouse, should have received the same protections that the 401(k) had given her.

In this particular case, a Federal Appeals Court in California disagreed and deciding that the IRA rules applied even if the funds originated in a 401(k).  In general, whether you have a 401(k) or an IRA, it is important to regularly check your beneficiary designations to make sure they are current and the same as the rest of your estate plan.

Concluding Takeaway

It is extremely critical to review beneficiaries and references to your surviving spouse as it relates to your 401(k) or IRA plan.

Estate Planning Help

Estate Attorney Jasper Berg