Your Ex-Spouse Can Still Inherit Your 401(k) Twenty Years After the Divorce. The Beneficiary Form Overrides the Will, and the Supreme Court Said So
A single form filed during your first marriage can legally hand your retirement savings to your ex-spouse decades later, and two Supreme Court rulings protect the outcome even when your will says something completely different.
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A divorced parent writes a will leaving everything to two adult children but never updates the 401(k) beneficiary form filed during the first marriage. Twenty years after the divorce, the parent dies with $500,000 in the plan. The plan administrator pays the ex-spouse. Under the rules below, the children named in the will have no claim to the 401(k).
This hits anyone who is divorced and still has a workplace retirement plan, including accounts left behind at old employers. Below: why the form beats the will, how IRAs differ, and five checks that prevent it.
Egelhoff and Kennedy: 2 Supreme Court Cases That Put the Form Above the Will
A workplace plan pays whoever the plan documents and beneficiary form name. The Employee Retirement Income Security Act (ERISA), the federal law governing most private-sector plans, preempts state law, meaning it overrides state rules that would redirect the money. Suze Orman warned on her podcast that the beneficiary on a retirement account overrides the wishes of your trust or will, so an ex-spouse left on the form gets paid even if the will names someone else. Clark Howard made the same point, noting that the designation “trumps whatever you put in your will.”
The Supreme Court settled the question twice. In Egelhoff v. Egelhoff (2001), the Court struck down a state law that automatically revoked an ex-spouse’s designation upon divorce, holding that ERISA preempts it for employer plans. In Kennedy v. Plan Administrator for DuPont (2009), an ex-wife had gave up her interest in her former husband’s plan in their divorce decree but remained on the form. A unanimous Court ruled the administrator acted properly by paying her, because it followed the plan documents.
Remarried? ERISA Makes Your Current Spouse the Default 401(k) Heir
Remarriage changes the outcome. Federal law makes a current spouse the default beneficiary of a workplace plan, and naming anyone else requires a signed, witnessed waiver from that spouse. Orman explained in a 2021 episode that without written permission, a spouse can absolutely claim it. That protection is why the stale form bites hardest for people who divorced and stayed single. Orman also noted that a divorced owner who has not remarried can name anyone, and that divorcing alone leaves the ex-spouse’s rights to the account in place.
401(k) vs. IRA: Where State Divorce Laws Can Step In
IRAs fall outside ERISA. They follow state law and the account agreement, so some states do revoke an ex-spouse automatically on IRAs while workplace plans keep paying whoever the form names. Whether a revocation rule reaches your IRA depends on your state’s statute and your custodian’s agreement.
| Account | Governing Rules | Automatic Revocation at Divorce |
|---|---|---|
| 401(k) and most private-sector workplace plans | ERISA (federal) | Blocked by Egelhoff |
| Traditional or Roth IRA | State law and custodian agreement | Applies in some states |
Divorce Decrees and QDROs: What a Judge’s Order Actually Changes
A divorce decree by itself generally leaves the beneficiary form in place, as the Kennedy family learned. A qualified domestic relations order, or QDRO, is the court order a plan must honor to split an account at divorce and pay a share to the ex-spouse. Howard discussed a divorce transfer on his show that could move as potentially a tax free transfer into the recipient’s own IRA. A QDRO splits the money that exists at the divorce. The owner’s remaining balance still passes to whoever the form names.
5 Beneficiary Checks to Run Before 2027
- Review every designation after a divorce, remarriage, birth, or death. Log in and read the named primary beneficiary on each account.
- Name contingent beneficiaries, the backups who inherit if the primary dies first.
- File changes on the plan’s own beneficiary designation form, then get written confirmation from the plan administrator. A will or a letter will not update it.
- Track down accounts at prior employers. Howard notes you have the right under the law to leave it in your old employer’s 401k, which is exactly how old forms go unchecked for decades.
- If you are remarried and want children from a first marriage to inherit part of a 401(k), ask an estate attorney or CPA about the spousal waiver and whether a trust fits as a contingent beneficiary.
One Form Decides the Whole 401(k)
A $500,000 401(k) goes to whoever the beneficiary form names, and after Egelhoff and Kennedy, neither a will nor a divorce decree redirects it. Pull up every designation this week and get the plan administrator’s written confirmation that the right names are on file (a stale beneficiary form is exactly the kind of paperwork we put on the cleanup checklist in a free estate guide here: Die With a Plan).
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Jake has been been working in financial media for almost 15 years. He focuses on all things personal finance for 24/7 Wall St. with high hopes to educate and entertain. Most recently, Jake spent 12 years working various roles at The Motley Fool. He started copy editing fool.com content, worked on premium and marketing campaigns, and helped launch The Ascent, a personal finance brand.
His work has been featured on platforms like MSN, Yahoo Finance, USA Today, and more. He's written about credit cards, social security, ETFs, savings accounts, and just about anything else you can imagine when thinking about money. Jake love to cook, play golf, and tell people he's never had a cavity. (It's true!)
