Can You Contest a Primary Beneficiary on a 401(k) if You're a Contingent?

If the owner of a 401(k) account dies before naming a beneficiary, the account must go through probate.

If the owner of a 401(k) account dies before naming a beneficiary, the account must go through probate.

A 401(k) plan is one method people use to save for retirement. One aspect of a 401(k) is the ability to name beneficiaries of the account in the event that the account holder dies before using all of the money in the account. Much like the process of contesting a will, one or more named beneficiaries on the account can contest the primary beneficiary listed on the account.

Primary and Contingent Beneficiaries

At any time, the account holder can change the beneficiaries listed on his 401(k) account by contacting the plan's administrator. The primary beneficiary is the first person the account holder wants to receive any unused account assets in the event of his death. A contingent beneficiary is the secondary recipient listed on the account if the primary beneficiary dies before receiving full distribution or if the primary chooses not to accept the distribution. The number of beneficiaries that an account holder may name is typically capped at 99 primary and 99 contingent beneficiaries.

Contesting the Primary Beneficiary

Only a contingent beneficiary listed on the 401(k) plan at the time of the account holder's demise is allowed to contest the primary beneficiary's right to the account's assets. Any party that is not listed on the account by the account holder is not eligible to contest the primary beneficiary. If the account holder named more than one primary beneficiary, any contingent wishing to contest would need to successfully contest all primary beneficiaries before she would be entitled to the money in the account.

Grounds for Contesting

The grounds for contesting a primary beneficiary are limited. Typically, a contingent beneficiary would not be able to contest a primary beneficiary just because he feels he was entitled to the money. The contingent beneficiary must be able to prove that the account holder was not of sound mind when naming his beneficiaries, that some form of fraud was involved or that one or more of the primary beneficiaries exerted undue influence over the account holder at the time of naming beneficiaries on the account.

Petitioning the Court

State and federal laws oversee 401(k) accounts, so a contingent beneficiary wishing to contest a primary beneficiary should consult with an attorney who specializes in estate law to determine her options. She will need to act quickly after the death of the account holder if she wishes to prevent the distribution of funds to the primary beneficiary. The process of contesting a beneficiary is difficult, and a court would need to find incontrovertible evidence of wrongdoing before proceeding with the case. An attorney could assess the viability of the case before the beneficiary determines whether to proceed.

About the Author

Chris Baylor has been writing about various topics, focusing primarily on woodworking, since 2006. You can see his work in publications such as "Consumer's Digest," where he wrote the 2009 Best Buys for Power Tools and the 2013 Best Buys for Pressure Washers.

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