401k Better or Worse- You Need Your Spouses Consent
Spousal Consent for a 401k Distribution
A woman who claimed that a plan distribution form indicating her consent to her late husband's distribution election was never properly notarized and therefore invalid has the agreement of a federal judge. The husband had elected a split distribution: one half in a lump sum and one half in an annuity without survivor benefits. The husband passed away after having received the lump sum distribution and two annuity payments. The wife then sued over the waiver's validity.
ERISA requires that the distribution waiver form be witnessed by a plan representative or a notary. In this case the notary had stamped the document without the wife present. The US District Court threw out the waiver form signed by the woman, finding it had not been properly witnessed by a plan representative or a notary as required by ERISA.
The form did not include a standard declaration that the wife had executed the form in front of the notary. The plan administrator argued that the requirement of a witness was a mere technicality that should not invalidate the wife's signature, but the court disagreed.
While acknowledging that outside of ERISA courts have found flaws in notarizations to be insufficient to defeat the validity of a document, the court noted that those cases "did not involve the ERISA strict requirements leading to the loss of benefits by a surviving spouse."