Look, I love a good soap opera. I grew up on Dallas, and I still sneak in The Bold and the Beautiful when I can. There\u2019s something about the betrayal, the big reveals, and the constant twists that makes it compelling. But you know where I hate a good soap opera? In 401(k) plan beneficiary designations.<\/p>\n
On May 1, 2025, the Fifth Circuit handed down a decision in LeBoeuf v. Entergy Corp. that reminds us\u2014yet again\u2014why 401(k) plan sponsors, participants, and yes, even plan committees, need to treat beneficiary designations like legal documents, not romantic subplots.<\/p>\n
Let\u2019s run through the plot.<\/p>\n
Meet the Cast<\/strong><\/p>\n Alvin Martinez worked for Entergy Corporation for over 35 years. He had a 401(k) plan account, worth about $3 million at the time of his death. In 2002, his wife passed away. In 2010, Alvin submitted a beneficiary form listing his four adult children as his beneficiaries. That form came with a warning: if he got remarried after submitting the form, his designation would be revoked unless he updated the form after the new marriage and got a notarized spousal waiver.<\/p>\n That warning wasn\u2019t buried in the fine print\u2014it was spelled out in black and white.<\/p>\n Fast-forward to 2014: Alvin gets remarried. No update to the form. No spousal waiver. Just quarterly statements from the plan that continued to list his kids as the beneficiaries\u2014statements that apparently didn\u2019t mention the plan rule that a new marriage nullifies a prior designation.<\/p>\n In 2021, Alvin passes away. The Committee paid the money, $3 million, to the second wife, not the adult children. The kids sued. The court said: case closed.<\/p>\n Don\u2019t Blame the Committee<\/strong><\/p>\n The adult children argued that the Committee misrepresented the plan by not correcting the quarterly statements. The court didn\u2019t buy it. Why? Because Alvin got the plan document, the beneficiary form, and at least nine summary plan descriptions (SPDs) explaining the marriage provision.<\/p>\n He had the information. He just didn\u2019t act on it.<\/strong><\/p>\n The court also emphasized that participants have a duty to inform themselves about the plan. That\u2019s a crucial takeaway. We live in a world where everyone expects the plan sponsor or recordkeeper to hold their hand through every life event. But here\u2019s the truth: retirement plans aren\u2019t babysitters. If you remarry, it\u2019s on you to update your beneficiary form. If you divorce, same thing. If your beneficiary dies, again\u2014your responsibility.<\/p>\n This Soap Opera Happens Too Often<\/strong><\/p>\n I\u2019ve seen this exact scenario more times than I care to count. It\u2019s not just big companies like Entergy, this happens with small businesses too. A participant dies, and then the phone calls start. \u201cBut he told me I was the beneficiary.\u201d \u201cThe quarterly statement says my name!\u201d \u201cHe wouldn\u2019t have wanted it this way.\u201d<\/p>\n Maybe all true. But courts don\u2019t care what he would have wanted. They care what he did. And if he didn\u2019t update the form or get the spousal waiver, it doesn\u2019t matter what\u2019s on the statement.<\/p>\n The Fix: Annual Beneficiary Reviews<\/strong><\/p>\n If you\u2019re a plan sponsor reading this, here\u2019s your action item: require your participants to review their beneficiary designations every single year. Make it part of your annual open enrollment or 401(k) check-in. Better yet, anytime a participant notifies HR of a life event, marriage, divorce, birth, death, make beneficiary review mandatory. It\u2019s a small ask that avoids million-dollar mistakes.<\/p>\n Also, let\u2019s get real: plan recordkeepers need to put disclaimers on those quarterly statements that remind participants the listed beneficiaries may be voided by life events. It\u2019s not foolproof, but it\u2019s better than radio silence.<\/p>\n Final Thought<\/strong><\/p>\n Beneficiary designations aren\u2019t dramatic until they are. Then suddenly, your 401(k) plan becomes an episode of Days of Our Lives, with grieving children and confused spouses fighting over a retirement account.<\/p>\n Don\u2019t let that happen. Don\u2019t let your plan be the one that ends up in federal court over a misunderstood form.<\/p>\n Because in the 401(k) world, the drama should be about investments, not inheritance battles.<\/p>\n And if you\u2019ve got questions about cleaning up your beneficiary process or educating your participants, give me a call. I\u2019d rather help you write a happy ending now than untangle the soap opera later.<\/p>\n <\/span><\/p>","protected":false},"excerpt":{"rendered":" Look, I love a good soap opera. I grew up on Dallas, and I still sneak in The Bold and the Beautiful when I can. There\u2019s something about the betrayal, the big reveals, and the constant twists that makes it … Continue reading