(b)lines Ask the Experts – Are Paper Beneficiary Designation Forms Required?

“I read with great interest your recent Ask the Experts column regarding who is responsible for beneficiary designations. Though the column makes reference to electronic beneficiary designations I was wondering if the law requires forms with original “wet” signatures which would, of course, preclude the use of electronic beneficiary designations. Can the Experts clarify if electronic designations are indeed permitted?”

Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

Well the answer to your question is—yes AND no! How is that for clarifying?

In general, participants may indeed designate a beneficiary electronically; this was first permitted under the Electronic Signatures Act of 2000, and IRS and Department of Labor (DOL) guidance has also affirmed that electronic designations are indeed permitted, with the caveat that certain provisions in the guidance must be met regarding the designation.

However, such electronic beneficiary designation will not be valid in the event that such a designation requires spousal consent. In such circumstance, the spouse’s signature must notarized or witnessed by a plan representative. Since electronic notarization is not currently possible, spousal consent cannot be done electronically at this time.

To summarize, in cases where spousal consent is not required, the use of an electronic beneficiary designation is permitted. However, where spousal consent is required, a paper form must be utilized.

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.