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ERISA
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- 1401(k) and IRA Beneficiary Rules Diverge Sharply, Experts Warn●Name Your Two Kids on a 401(k), and Federal Law Can Hand It to Your Spouse Anyway. Name the Same Two Kids on an IRA, and They Get Every Dollar
Federal law can override the beneficiary listed on a 401(k) and pass the money to the account holder's spouse, while an IRA listed to children follows the named beneficiaries exactly. The difference stems from rules treating 401(k) plans as spousal-rights plans under ERISA, meaning two kids named on a 401(k) may receive nothing. Financial writers are urging savers to understand the distinction when planning inheritances.