Best Practices for Beneficiary Designations in Retirement Plans 

A Multnomah Group White Paper

Beneficiary designations are used in retirement plans to determine who is entitled to benefits upon the death of a participant. In plans covered by ERISA, aside from certain spousal protections, other types of beneficiary designations are generally a matter of plan design.

In December 2012, the Advisory Council on Employee Welfare and Pension Benefit Plans ("ERISA Advisory Council") prepared a report to the United States Secretary of Labor, titled "Current Challenges and Best Practices Concerning Beneficiary Designations in Retirement and Life Insurance Plans." Based in large part on that report ("the DOL report") as well as our own extensive experience working with retirement plan sponsors, we will be breaking down some of the most common problems when dealing with beneficiary designations, and outlining possible solutions to these problems. This guidance is intended to get plan sponsors to think about their plan design and operations related to beneficiary designations in order to get ahead of issues, and assist participants in ensuring their money ends up where it is intended (and not end up where it is not intended).

Issues for plan sponsors to consider when it comes to beneficiary designations are very broad. There is no "one-size fits all" answer when designing a retirement plan to deal with beneficiary designations. The right approach for your plan will be based on a number of facts and circumstances. Listed below are just a few of the issues plan sponsors should consider when administering beneficiary designations.

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