If you own a 401(k), IRA, Roth, 403(b), TSP, or HSA, the person who inherits it is determined by a one-page beneficiary form you probably signed on your first day at a job and never looked at again, a form that overrides your will. That form outranks your will, your trust, and even a signed divorce decree in federal court, every single time. Most people never learn this until a funeral, when the wrong name pays out.
The Form Beats the Will. Always.
When you die, your plan administrator does not call your attorney or wait for probate. They pull the beneficiary designation on file and mail the check to whoever is listed. Your will can leave “all my assets to my current spouse and children.” If your college roommate or your ex from 1998 is still on the 401(k) form, they get the money. The will is irrelevant to that account. This is the entire design.
Where the Rule Actually Lives
Workplace retirement plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA), which requires the administrator to pay the named beneficiary and preempts conflicting state law. The Supreme Court nailed this down in Kennedy v. Plan Administrator for DuPont Savings and Investment Plan (2009): an ex-wife still listed on the form collected the balance even though she had waived her rights in the divorce decree. IRAs run under Internal Revenue Code §408 and your custodian’s contract, but the mechanic is identical. Life insurance under state contract law works the same way. Form controls. Every time.
Who This Applies To
Anyone with a 401(k), 403(b), 457, Thrift Savings Plan, traditional IRA, Roth IRA, SEP, SIMPLE, HSA, annuity, or life insurance policy. That covers essentially every working adult in America. It also touches a lot of money: households pulled $4,304.5 billion in income from assets in the second quarter of 2026, and the personal savings rate has fallen from 6.2% in early 2024 to just 2.8% now, which means retirement accounts are a bigger share of net worth than ever. The rule does not apply to taxable brokerage accounts unless you added a transfer-on-death (TOD) designation, or to real estate outside a titled joint tenancy.
What to Do This Week
- Log into every retirement and insurance account you own and screenshot the current primary and contingent beneficiaries. If you cannot see one online, call and ask them to email a copy.
- Name both a primary and a contingent beneficiary. If the primary dies before you and you never update, the account falls into your estate, which means probate, delay, and lost tax planning options.
- For a 401(k), if you are married, ERISA makes your spouse the primary beneficiary by default. Naming anyone else requires your spouse’s notarized written consent. IRAs do not require federal spousal consent, but community property states may.
- Update after every life event: marriage, divorce, birth, death, remarriage. Do not assume the divorce decree updated the form. It almost never does.
- Coordinate with the SECURE Act’s 10-year rule, effective for deaths after 2019: most non-spouse beneficiaries must fully drain an inherited retirement account within 10 years. A surviving spouse, a minor child, a disabled heir, or someone less than 10 years younger than you can still stretch withdrawals.
The Trap Nobody Warns You About
Two catches will bite you. First, if you get divorced and forget to update the form, your ex may collect even in states with automatic “revocation on divorce” statutes, because ERISA preempts state law. That was the exact holding in Kennedy. Second, if you name “my estate” as the beneficiary (or leave the line blank), the account skips the stretch and see-through trust options entirely. Non-spouse heirs get hit with the 10-year drain, and the last-year distribution can push them into a top tax bracket. On a median full-time salary of $1,251 a week in the second quarter of 2026, a six-figure forced distribution in year 10 is a life-altering tax event. Fix the form. It takes five minutes and beats the most expensive will your lawyer ever drafted.
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