Don't Lose Millions: Update Your Cash Balance Plan Beneficiary!
ERISA isn't your ex's name - but it might give them your money.
About 40-50% of marriages end in divorce.
And when divorce happens, things can get ugly— fast.
If you’re a practicing physician who has been sheltering six figures of income every year into a Cash Balance plan, that retirement account can snowball into a $1–$2 million nest egg in just 5-7 years.
You worked hard for it. You deserve to protect it.
But here’s the problem: the rules about who gets your retirement money are very strict. ERISA - no, not the name of a mistress - determines how your retirement money is handled.
Who Is ERISA?
ERISA stands for the Employee Retirement Income Security Act - not a member of Black Pink. :)- It is a federal law that sets the rules for how retirement accounts, including your Cash Balance plan, are managed.
Under ERISA, the plan administrator (think Fidelity or Vanguard) is legally required to follow to follow the written plan documents - word for word. They cannot make exceptions, even if your personal circumstances have changed.
There is only one exception: a Qualified Domestic Relations Order (QDRO).
In a divorce, a QDRO is a special type of court order that allows a plan administrator to legally redirect retirement plan benefits to an ex-spouse or other alternative payee. But if you don’t get a QDRO, and you don’t update the beneficiary form, the plan has no choice but to pay the person still listed - even if your divorce degree says otherwise.
Now let’s walk through a real-life nightmare.
A Costly Oversight: Kennedy v. Plan Administrator for DuPont Savings (Supreme Court Case)
William Kennedy had a DuPont retirement plan. While married, he named his wife Liv as the beneficiary. Later, they divorced. The divorce decree clearly stated that Liv was no longer entitled to any of William’s retirement benefits.
But William never updated the beneficiary form.
And Liv never filed a formal “disclaimer” to give her rights to the retirement benefits with the plan administrator.
Then William died.
Both Liv and his estate wanted the retirement account money.
So - who got it?
The Supreme Court ruled in Liv’s favor.
Why?
Because under ERISA, the plan administrator must follow the last valid beneficiary designation on file - exactly as written.
Divorce decrees, prenups, even your will—none of that overrides the plan documents.
So Liv got the retirement account.
William’s estate got nothing.
The Lessons
If you don’t update your beneficiary designation after a divorce - or any major life event - your money might end up in the hands of someone you no longer want in your life.
Just ask William… the ghost.
That’s not just awkward. That’s devastating.
Here’s what you need to do:
Review your beneficiary designations every year.
Update them after major life events—marriage, divorce, birth of a child, or death of a loved one.
Confirm the change was processed and filed. Don’t assume it went through.
A few proactive steps now can prevent a financial horror story later.
Final Thoughts
If you’ve built a sizable Cash Balance plan, don’t let a simple oversight derail your financial plan.
Updating your beneficiary online might be one of the easiest risk management moves you can make - and it could save you or your family from losing millions.
Update your beneficiary.
Double-check it.
The check it again.
It’s boring. But it’s necessary.
Because when it comes to retirement plans, ERISA, the federal law, is crystal clear:
The plan document wins.
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