You can leave your pension to almost anyone you choose, but only if you’re single or your spouse signs off. For most private-sector retirement plans, federal law makes your husband or wife the automatic beneficiary, and you can’t redirect the money to a partner, sibling, friend, or charity without a written, witnessed spousal waiver. Beyond that consent rule, how much freedom you actually have depends on whether the plan is a 401(k)-style account or a traditional pension that pays a monthly annuity.
The Spousal Consent Rule Comes First
Under 29 U.S.C. § 1055, if your plan is covered by the Employee Retirement Income Security Act, your spouse is the default beneficiary regardless of what your designation form says.1Office of the Law Revision Counsel. 29 U.S. Code 1055 – Requirement of Joint and Survivor Annuity and Preretirement Survivor Annuity That covers defined benefit pensions, money purchase plans, and most 401(k)-type plans.
To name someone else, your spouse has to sign a written waiver acknowledging that they’re giving up the survivor benefit, and the signature has to be witnessed by a plan representative or a notary public.1Office of the Law Revision Counsel. 29 U.S. Code 1055 – Requirement of Joint and Survivor Annuity and Preretirement Survivor Annuity No witnessed consent, no valid designation — the plan pays the spouse. One narrow exception: if the total vested balance is $5,000 or less, the plan can pay a lump sum without either your election or your spouse’s consent.2Internal Revenue Service. Fixing Common Plan Mistakes – Failure to Obtain Spousal Consent
If you’re unmarried, none of this applies. You can name anyone you want without a third party’s permission.
What You Can Do in a 401(k) or Other Defined Contribution Plan
Defined contribution plans like 401(k)s and 403(b)s hold an individual account balance, and once you’re past the spousal consent step, you have wide latitude. You can name a partner, a sibling, a friend, a former colleague, a charity, or several people splitting the money in whatever percentages you choose, as long as the total adds up to 100%.3U.S. Department of Labor. FAQs About Retirement Plans and ERISA
You can also usually name two tiers. A primary beneficiary is first in line. A contingent beneficiary receives the money only if every primary beneficiary has already died. Some plans offer a “per stirpes” designation, which sends a deceased beneficiary’s share to that person’s own children rather than redistributing it among your other beneficiaries. Not every plan supports per stirpes, so ask the administrator if that structure matters to your estate plan.
Traditional Pensions Are Much More Restrictive
A defined benefit pension promises a specific monthly payment for life rather than a pot of money. If you’re married, federal law requires the default payment form to be a qualified joint and survivor annuity that keeps paying your spouse at least half your benefit amount after you die.4Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans You and your spouse both have to waive that arrangement in writing to choose anything else.3U.S. Department of Labor. FAQs About Retirement Plans and ERISA
Even with a waiver, defined benefit plans typically limit survivor payments to a legal spouse and dependent children. You generally cannot direct a monthly annuity to a friend, a non-dependent adult child, a sibling, or a charity. If no qualifying survivor exists when you die, the remaining liability stays inside the pension fund rather than passing to your estate. Of all the retirement vehicles, a traditional pension is the hardest to leave to someone outside your immediate family.
IRAs Play by Different Rules
Individual retirement accounts are not covered by ERISA, so the federal spousal consent requirement does not apply. With a traditional IRA or Roth IRA, you can generally name any person or entity as beneficiary without your spouse’s signature. That freedom carries a catch in community property states, where a spouse may have a legal claim to IRA assets accumulated during the marriage even if they aren’t named on the form. The rules vary by state, and married IRA holders in community property states should get legal advice before naming a non-spouse beneficiary.
Trusts, Charities, and Minor Children
You aren’t limited to naming people. Most defined contribution plans accept trusts, charities, and other legal entities. A registered charity can receive plan proceeds without paying income tax on them. A trust lets you attach conditions to how and when the money is distributed, which is useful for a disabled relative who receives means-tested benefits or for heirs you don’t want handling a large sum at once. The plan needs the entity’s official legal name and tax identification number to process the designation.
Naming a minor child directly gets complicated. A child can’t legally manage a retirement account, so the proceeds would have to go through a court-appointed guardian or a custodial account under your state’s Uniform Transfers to Minors Act. Two cleaner options: name a trust set up for the child’s benefit, or designate an adult custodian on the beneficiary form if your plan allows it. Custodianships end at an age set by state law, so a trust gives you more control over the timeline.
Divorce Does Not Automatically Remove an Ex-Spouse
This is where families lose the most money to avoidable mistakes. Many states have laws that automatically revoke an ex-spouse as beneficiary after a divorce, but for ERISA-covered plans, federal law overrides those state statutes. The Supreme Court held in Egelhoff v. Egelhoff that ERISA preempts state revocation-on-divorce rules. If your ex is still listed as your beneficiary on the plan’s records when you die, the plan pays your ex — no matter what the divorce decree said.
The reliable way to divide retirement benefits in a divorce is a Qualified Domestic Relations Order. A QDRO is a court order that directs the plan administrator to pay a portion of your benefits to an alternate payee such as a former spouse or dependent child.5U.S. Department of Labor. Qualified Domestic Relations Orders Under ERISA – A Practical Guide to Dividing Retirement Benefits Without a valid QDRO, the plan can only pay according to its own terms.
If you’ve divorced and want your former spouse off the account, update the designation now. The divorce itself almost certainly changed nothing on the plan’s records.
The Beneficiary Form Beats Your Will
Retirement assets pass outside of probate directly to whoever is named on the plan’s beneficiary form. Your will does not control them. If your will leaves everything to your daughter but the 401(k) form still lists your ex-spouse, the ex-spouse gets the 401(k). Courts enforce the form. The only way to keep these aligned is to review your designations whenever you update your estate plan.
If You Never Name a Beneficiary
When no designation is on file, the plan document decides. Most plans work through a default hierarchy that starts with a surviving spouse, then moves to children, parents, siblings, and finally your estate.6U.S. Department of Labor. Current Challenges and Best Practices Concerning Beneficiary Designations in Retirement and Life Insurance Plans Ending up at the estate is the worst outcome: those assets go through probate, which brings delays, legal fees, and the possibility that the money reaches someone you never intended. A filed designation moves the assets directly to the named person outside of probate.
Whoever You Name Faces a 10-Year Deadline
The choice of beneficiary is only half the picture, because how quickly your heir must withdraw the money drives their tax bill. Since 2020, most non-spouse beneficiaries who inherit a retirement account must empty it by the end of the 10th year after the account owner’s death.7Internal Revenue Service. Retirement Topics – Beneficiary That replaced the older “stretch” approach that let heirs spread distributions across their own lifetime.
A narrow group of “eligible designated beneficiaries” can still stretch distributions over their own life expectancy:
- Surviving spouses, who can roll the account into their own IRA and use their own distribution schedule
- Disabled or chronically ill beneficiaries
- Anyone no more than 10 years younger than the deceased owner
- Minor children of the account owner, who can stretch distributions until age 21, at which point the 10-year clock starts
Everyone else — adult children, siblings, friends, unmarried partners — falls under the 10-year rule. If the original owner died after reaching required minimum distribution age (73 for 2026), the beneficiary must also take annual distributions during the 10 years.8Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs) If the owner died before RMD age, the beneficiary has more flexibility on timing within the window, but the account still has to be empty at year 10. Traditional accounts hand the heir an income tax bill on every distribution; inherited Roth accounts are generally tax-free but still have to be emptied within 10 years.7Internal Revenue Service. Retirement Topics – Beneficiary
How to File or Update Your Designation
Most plan administrators handle beneficiary changes through an online portal. You’ll need each beneficiary’s full legal name, date of birth, and Social Security or tax identification number, plus the percentage each is to receive. If you name several people jointly without specifying percentages, most plans split the account equally.
If you’re married and naming anyone other than your spouse, you’ll also need a completed spousal waiver with your spouse’s signature witnessed by a notary or plan representative.3U.S. Department of Labor. FAQs About Retirement Plans and ERISA Human resources or the plan’s benefits portal will have the form.
After you submit, ask for written confirmation or a dated copy of the processed form and keep it with your financial records. Processing times vary; some plans update within days, others take a month. That confirmation is your proof of intent if the digital system fails or if family members later challenge the designation. Review your elections after any major life event — marriage, divorce, a birth, the death of someone named on the form. A choice that made sense five years ago can be badly wrong today.