RSS

The Battles Over Retirement Accounts

In case of death, do you know who gets your retirement account?

Before answering, think about it. Do you really know? In many cases, this amounts to a person’s life savings. It’s worth knowing.

As it turns out, the rules are more confusing that you might think. Carolyn Geer, writing for the WSJ, provides one such example:

Take the case of Leonard Kidder, who worked at Cajun Industries, a privately owned construction company in Baton Rouge, La., for nearly 20 years. The carpenter-turned-superintendent named Betty Kidder, his wife of 41 years, the beneficiary of his 401(k) account in the event he died before her.

As fate would have it, Betty died first, so Leonard updated his account paperwork, naming their three adult children the beneficiaries of the 401(k).

Eventually he got remarried, to Beth Bennett Kidder, and was on the verge of retiring. Six weeks later, at the age of 66, he died.

When Mr. Kidder’s children from his first marriage tried to claim the assets, reasoning they were the ones named on the most recent beneficiary form, they were rebuffed by Cajun, which ended up asking a court to determine the rightful owner of the money. Under the terms of the company’s 401(k) plan, if an employee dies, the employee’s spouse has the right to the account assets, unless the spouse waives that right in writing. (That priority for spouses springs from federal law.) Beth Bennett Kidder had never signed such a waiver.

The new Mrs. Kidder filed a motion for summary judgment, and the matter eventually ended up in federal district court in Baton Rouge, which this year awarded the approximately $250,000 in the account to her, disinheriting the children.

Geer’s article should be mandatory reading for just about anyone. Mandatory. Don’t miss it. Geer’s explanation of the labyrinthine rules surrounding retirement account assets is a harsh reminder that we all need to stay on top of these things.

###

More links:

MIPRO Consulting main website.

MIPRO on Twitter and Facebook.

About this blog.

Tags: , , , , Posted by

Leave a Reply

%d bloggers like this: