When a participant in a retirement plan governed by the Employee Retirement Income Security Act (ERISA) passes away, most families assume the process of distributing the benefits will be straightforward. But that is often not the case. Beneficiary disputes are one of the most common and frustrating issues that arise under ERISA-covered plans. Whether it's a contested designation, missing paperwork, or a surviving spouse who was never properly notified, the result is the same: legal uncertainty and delayed access to the retirement funds the deceased worked their entire career to build. If you need an Arkansas life insurance lawyer call us.
Who Gets the Benefits After Death? ERISA's Beneficiary Rules
Under ERISA, the participant can name any individual or entity as a beneficiary and can update that designation at any time. But if the participant fails to do so, or the paperwork is lost, outdated, or invalid, the plan’s default rules come into play.
Critically, ERISA requires that the participant’s spouse be the default beneficiary of a qualified retirement plan unless the spouse has signed a written waiver consenting to a different beneficiary. This spousal protection provision overrides many state laws and often becomes the flashpoint for legal disputes.
We have seen cases where an employee designated their adult child as the beneficiary years ago before marrying a second spouse. When the employee died, both the child and the surviving spouse claimed the funds. Because no spousal waiver had been signed, the plan had no choice but to pay the benefits to the surviving spouse, even though the participant had intended for the child to receive everything. That is how ERISA works. Federal law overrides state wills and verbal promises.
ERISA Requires Plans to Notify and Distribute Promptly
ERISA does not just set rules for who gets paid. It also imposes strict requirements on how and when benefits must be distributed. Plan administrators must notify beneficiaries of their rights and ensure timely payment after a participant’s death.
But the real world is rarely so neat. In one case we handled, a beneficiary was never informed she was entitled to retirement funds after her husband’s death. The employer claimed it had sent notices to an old address. By the time she discovered the account existed, the plan had already distributed the funds to a relative named on an old form. We litigated the case under ERISA’s fiduciary duty provisions and recovered the full balance.
When Disputes Arise: How ERISA Handles Conflicts Over Beneficiaries
Disputes under ERISA retirement plans usually start with the plan administrator, who is responsible for making an initial determination about who the rightful beneficiary is. That decision is supposed to be based on the plan's terms and the documents in the participant’s file. But when those documents are missing, outdated, or unclear, the administrator may make a call that leads to litigation.
We have seen many cases where the administrator paid out benefits based on an old designation, even though the participant had clearly tried to update their beneficiary through an HR platform, email, or handwritten note. Because ERISA only honors formal plan documents, informal efforts, no matter how sincere, may be ignored unless a court steps in.
In one recent case, two adult children sued a stepmother who had received their father’s retirement benefits. Their father had filled out new forms naming them as beneficiaries, but HR never processed them. The plan administrator paid the stepmother based on the last valid form on file. After extensive discovery, including testimony from the employer’s benefits team, we were able to prove the failure was on the employer, not the participant. The court ordered the plan to recover the funds and reissue them to the children.
When to File an ERISA Lawsuit Over Retirement Plan Benefits
If a beneficiary dispute cannot be resolved through the plan's internal procedures, ERISA provides a clear path to federal court. A beneficiary can file a lawsuit under ERISA Section 502(a)(1)(B) to recover benefits owed under the plan. These cases are tried without a jury, and the judge will typically review the plan documents, the administrative record, and whether the plan administrator abused their discretion or violated ERISA’s fiduciary duties.
Because the legal standard often favors the plan administrator’s decision, it is crucial to build a clear and well-documented record before filing suit. This includes collecting all beneficiary designation forms, internal correspondence, and evidence of any plan errors.
Why These Disputes Happen So Often
Beneficiary disputes under ERISA happen more often than most people realize, and not always because of intentional wrongdoing. Sometimes the participant simply forgets to update a designation after marriage, divorce, or childbirth. Other times, the employer mishandles a form or fails to follow proper procedures.
The problem is that once the participant has passed away, they can no longer clarify their intent. Without a clear and valid designation on file, even well-meaning family members can find themselves locked in litigation for years while grieving.
If You Are Facing a Beneficiary Dispute, Legal Help Can Make the Difference
ERISA disputes are technical, paperwork-driven, and governed by strict federal rules. Plan administrators often side with whoever is listed on the most recent form, regardless of what the participant actually wanted. If you have been denied retirement benefits or are involved in a dispute with another potential beneficiary, do not wait.
Our attorneys have handled ERISA litigation involving beneficiary disputes, wrongful distributions, missing waivers, and failure to notify. We have won cases against Fortune 500 employers, union pension plans, and public-sector retirement systems.
If you are facing a denied claim or a dispute over retirement plan benefits, contact us. We will investigate the documents, preserve your rights under ERISA, and fight to ensure your loved one’s intent is honored.
Call us today at 800-330-2274 for a free consultation.