Some qualified retirement plans, including some retirement plans preapproved by the IRS, contain provisions that automatically revoke a spouse as a participant’s beneficiary upon the participant and spouse becoming legally separated. The IRS recently released guidance stating that such a plan provision causes a plan to be noncompliant with the spousal waiver rules.

The confusion lies in IRS regulations that do not require spousal consent in certain circumstances, including where the participant becomes legally separated from his or her spouse. However, the IRS’s recent guidance makes clear that while a participant may affirmatively elect to name a beneficiary other than his or her legally separated spouse (or affirmatively waive any qualified pre-retirement survivor annuity (QPSA) available under a plan) without obtaining spousal consent, the plan’s terms may not automatically revoke the participant’s legally separated spouse as the participant’s beneficiary (or treat the participant as being unmarried for purposes of any QPSA available under the plan).

Plans may still contain provisions that automatically revoke a participant’s designation of his or her former spouse as beneficiary following the participant’s divorce from the former spouse.

Plan sponsors should review their plan documents to determine whether their plan automatically revokes a participant’s legally separated spouse as the participant’s beneficiary in order to determine whether their operational procedures and/or plan document need to be amended.