To help employers properly administer their 401(k) plans, in 2022, Foley & Lardner LLP is authoring a series of monthly “401(k) Compliance Check” newsletters. This article includes some tips for administering 401(k) plan beneficiary designations.
In last month’s 401(k) Compliance Check, we discussed best practices for drafting a 401(k) plan summary plan description (SPD). This month we provide some best practices for plan administrators’ handling of 401(k) plan beneficiary designations.
401(k) plan sponsors and administrators have a vested interest in making sure plan participants have properly completed and filed their beneficiary designations. The majority of beneficiary designation issues affecting plan sponsors and administrators arise after a participant has passed away and is no longer able to make changes. In order to prevent costly and time-consuming, competing claims and potential litigation related to 401(k) account balances, plan sponsors and administrators should strongly consider investing more time in developing and following through with best practices related to beneficiary designations that are intended to avoid any future, competing claims and potential litigation. In addition to helping plan sponsors and administrators satisfy their fiduciary obligations in connection with 401(k) plan administration under the Employee Retirement Income Security Act of 1974 (ERISA), using best practices in connection with beneficiary...
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