Navigating beneficiary designations: A guide for Wisconsin employers

Employers play a pivotal role in guiding employees through their benefits options, including retirement plans and life insurance. However, one crucial aspect often goes overlooked: beneficiary designations. In Wisconsin, these designations carry significant legal weight and can directly shape how an employee’s benefits are distributed after their death.

Binding nature of beneficiary designations in Wisconsin

For 401(k)s, 403(b)s, profit-sharing plans, and employer-sponsored life insurance (for simplicity, we’ll refer to them collectively as benefits plans), the beneficiary designation on file at the time of an employee’s death generally controls who receives the benefit. This designation will typically override instructions in a will or trust, even if those estate planning documents are more recent.

If an employee has no beneficiary on file, or if all listed beneficiaries have predeceased the employee, most plan administrators will distribute benefits according to the benefits plan’s default provisions. There are no national laws or regulations that govern what the default provisions for a benefits plan must be. Therefore, you should ensure you understand the default provisions for your specific benefits plans.

Default rules can vary but often prioritize the estate. Sometimes, certain default provisions can prioritize the spouse or children. In summary, a lack of beneficiary designation could cause the proceeds from the benefits plan not to align with the employee’s intentions and can create delay, expense, or conflict.