Why Your Ex Might Still Inherit Your 401(k)

In 2023, more than 1.8 million Americans got divorced. For many Americans, retirement accounts represent their largest assets, and divorce often means dividing those accounts between them and their former spouses. For the portion of a retirement account retained by a plan participant after a divorce, updating the beneficiary designation is an important follow-up step. In cases where the intent is to remove a former spouse as beneficiary of that retained portion, that update must be made in accordance with the plan’s requirements. Otherwise, the attempted change will fail.

In this excellent blog posting on Morningstar, Denise Appleby writes about a recent case providing an important lesson on how the wrong paperwork can cause a beneficiary change request to fail.