ERISA Preemption of State Divorce-Revocation Statutes in 2026: Egelhoff, Kennedy, Hillman, Sveen, and the QDRO Workaround

David Egelhoff died in a car crash on the way home from work in December 1994. He had divorced his wife Donna two months earlier. His employer's ERISA-covered pension plan and life-insurance plan still listed Donna as the primary beneficiary — because he had not filed a new beneficiary form. Under a Washington statute passed the year before, Donna's beneficiary designation was automatically revoked the moment their divorce decree was entered, and the money should have flowed to David's children by an earlier marriage. It did not. Seven years later the Supreme Court held 7-2 that ERISA §514(a) preempted the Washington statute, and Donna kept the $46,000 in life insurance and the pension. The children got nothing.^[1]

That case, Egelhoff v. Egelhoff, is the load-bearing precedent for a rule that is now over two decades old but that most divorcing Americans still do not know: the state statute that revokes your ex-spouse from your will at divorce does not revoke them from your 401(k), your pension, your ERISA-covered group life policy, or your HSA if held through an ERISA plan. In 22-plus states, the same statute does apply to your IRA, your individually-owned life insurance, your payable-on-death bank account, and your non-ERISA governmental plan — creating a jarring split-treatment problem inside a single decedent's estate.^[2]

This field guide walks through the four Supreme Court cases that define the boundary — Egelhoff (2001), Kennedy v. DuPont (2009), Hillman v. Maretta (2013), and Sveen v. Melin (2018) — explains why the ERISA/IRA carve-out matters, walks through the QDRO workaround that is the only reliable way to make state family-law reach an ERISA plan, and closes with an 8-item post-divorce checklist that most divorce lawyers do not run because it lives at the intersection of family law, ERISA, and estate planning. If you are administering an inherited IRA, running the 10-year clock on a former-spouse-designated 401(k) inheritance, or drafting a QDRO right now, this piece is the missing chapter.

1. The statute in plain English: ERISA §514(a) and the "relate to" test

The Employee Retirement Income Security Act of 1974 preempts state law with what the Supreme Court has repeatedly called one of the broadest preemption clauses ever enacted. The operative text is 27 words long. Section 514(a), codified at 29 U.S.C. §1144(a), reads:

29 U.S.C. §1144(a)Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.^[3]

The load-bearing phrase is "relate to." The Supreme Court held in Shaw v. Delta Air Lines, 463 U.S. 85 (1983), that a state law "relates to" an ERISA plan whenever it has "a connection with or reference to such a plan." That test has been narrowed slightly in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995), and its progeny, but it still catches state laws that dictate who receives plan benefits, how benefits are calculated, or how plan administrators must process claims.^[3]

A state's automatic-revocation-on-divorce statute — typically modeled on Uniform Probate Code §2-804 — directs the plan administrator to disregard the participant's most recent written beneficiary designation and instead pay a different person. That is precisely the kind of state-law override that "relates to" the plan's benefit-payment rules, which is why Egelhoff came out the way it did.

The 514(b) carve-outs that matter for divorce

ERISA §514(b) contains a series of exceptions. Two are relevant to divorce:

• §514(b)(7) — expressly preserves the ability of a state court to enter a Qualified Domestic Relations Order under §206(d)(3). This is the QDRO carve-out that permits state family-law to reach plan assets by court order, not by statute.^[4]
• §514(a) itself — does not preempt state generally applicable criminal laws, banking laws, or insurance regulation (the "savings clause" in §514(b)(2)(A) is limited to insurance regulation of insurance companies, not benefit designations under ERISA welfare-benefit plans).

Everything else is preempted if it "relates to" an ERISA plan. The divorce-revocation statute is not banking, insurance regulation, or criminal law — it is family and probate law that reaches into a plan's beneficiary rules. It fails the test.

2. Egelhoff v. Egelhoff (2001): the case that fixed the rule

The Washington statute at issue in Egelhoff was RCW §11.07.010, enacted in 1994 and effective January 1, 1995. It provided that "if a marriage is dissolved or invalidated, a provision made prior to that event that relates to the payment or transfer at death of the decedent's interest in a nonprobate asset in favor of or granting an interest or power to the decedent's former spouse is revoked." Nonprobate assets expressly included life insurance policies and retirement accounts.^[1]

David Egelhoff filed for divorce in April 1994. The Washington decree was entered April 22, 1994. Two months later, on the way home from his job at Boeing, David died. He had not updated the pension or the life insurance beneficiary. Donna, his ex-wife, was still listed. The Boeing plan paid Donna the $46,000 life insurance benefit and the balance of the pension.

David's children by an earlier marriage sued in Washington state court, arguing that under RCW §11.07.010, the beneficiary designation was revoked as of the divorce decree and the plan should have paid them. The Washington Supreme Court agreed. Donna appealed to the U.S. Supreme Court.

The 7-2 holding

Writing for the majority, Justice Clarence Thomas held that RCW §11.07.010 was preempted by ERISA §514(a). The state statute had a "connection with" ERISA plans in two distinct ways: it "binds ERISA plan administrators to a particular choice of rules for determining beneficiary status," and it "implicates an area of core ERISA concern" by "governing the payment of benefits, a central matter of plan administration."^[1]

The Court emphasized that the whole point of ERISA's preemption clause was to spare plan administrators the burden of complying with a patchwork of 50 different state family-law regimes. If Washington could impose its automatic-revocation rule, so could every other state, and a multi-state employer's plan administrator would be forced to identify each participant's state of residence, apply the correct state's family-law statute, and adjust distributions accordingly. That is exactly the burden ERISA was designed to eliminate. Justices Breyer and Stevens dissented on the ground that the Washington statute was, in their view, only a "background rule of state law" that did not seriously burden plan administration.

3. Kennedy v. DuPont (2009): the divorce decree waiver problem

Egelhoff answered the state-statute question but left a related one open: what if the former spouse expressly and voluntarily waived plan benefits in the divorce decree itself? Some circuits had held that a waiver in a divorce decree operates as a contract between the spouses and can defeat the ex-spouse's claim to plan benefits, even if the beneficiary form was never updated. The Supreme Court took up the question in Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009).^[5]

William Kennedy worked for DuPont for 36 years. In 1971 he named his wife Liv as sole beneficiary of his DuPont Savings and Investment Plan (SIP). In 1994 they divorced. The divorce decree, entered in Texas, included a clause in which Liv "divests herself of all right, title, interest, and claim in and to" William's SIP account. William did not file a new beneficiary form and did not obtain a QDRO. He died in 2001. The SIP had a balance of $402,000. The plan administrator paid Liv.

William's estate (through his daughter and executrix, Kari Kennedy) sued to recover the money, arguing that Liv's express waiver in the divorce decree overrode her status as designated beneficiary. The estate did not challenge the plan administrator's decision to pay Liv — it sought recovery from Liv directly. The Fifth Circuit held the waiver was preempted. The Supreme Court unanimously affirmed on different grounds.^[5]

The Court's two-part holding

Justice Souter, writing for a unanimous Court, held:

1. The waiver was not preempted as such — because it was contained in a divorce decree between two private parties, not in a state statute, and it did not purport to bind the plan administrator. The waiver was, in that sense, an ordinary contract.
2. But the plan administrator was still required to pay Liv — because ERISA §404(a)(1)(D) requires the administrator to act "in accordance with the documents and instruments governing the plan," and the plan's documents identified Liv as the beneficiary. The plan document controls.

What the Court expressly did not decide was whether Kari, as executrix, could recover from Liv after distribution under a state-law breach-of-contract or unjust-enrichment theory. That question was left open. In the 16 years since Kennedy, several circuits have allowed post-distribution suits against the ex-spouse where the divorce decree contains a clear waiver. Others have not. The safer route by far is to update the beneficiary form before death and never rely on the post-distribution suit.^[5]

Why Kennedy is worse than Egelhoff for the intended heirs

Egelhoff at least involved a participant who died before the state statute had a chance to operate (the Washington statute was passed in 1994, effective 1995, and David died in June 1994 — the trial-court analysis debated retroactivity). Kennedy involved a divorce decree with an explicit, express, notarized waiver by the ex-spouse, and the Supreme Court still held the money must go to her. There is no cleaner statement of the plan-document-controls rule.

4. Hillman v. Maretta (2013): the federal-statute preemption analog

Egelhoff and Kennedy involved private-sector ERISA plans. Hillman v. Maretta, 569 U.S. 483 (2013), extended the same analytical framework to the Federal Employees' Group Life Insurance Act (FEGLIA), the statute governing life insurance for federal employees.^[6]

Warren Hillman, a federal employee, married Judy Maretta in 1996 and named her as beneficiary of his FEGLI policy. They divorced in 1998. Warren did not update the FEGLI form. He remarried Jacqueline Hillman in 2002 and died in 2008. FEGLI paid Judy the $124,558 death benefit, per the last-signed beneficiary form.

Jacqueline sued Judy under Virginia Code §20-111.1(D), a state statute that imposed personal liability on a former spouse who received life insurance proceeds after a divorce, requiring the former spouse to pay them over to whoever would have received them absent the beneficiary designation. This was Virginia's clever workaround to federal preemption: don't try to redirect the payment, but impose a state-law duty on the ex-spouse after the money is received. It was, in structural terms, exactly the post-distribution remedy that Kennedy had left open.

The 9-0 holding

Justice Sotomayor, writing for a unanimous Court, held Virginia §20-111.1(D) preempted by FEGLIA. The reasoning: the state statute "makes a critical alteration" to the federal beneficiary-designation scheme by "add[ing] a second step" in which the state directs disposition of the proceeds after federal law had already directed disposition to the named beneficiary. Congress had spoken through FEGLIA in the beneficiary form; the state could not add another layer.^[6]

Hillman is technically about FEGLIA, not ERISA. But the "cannot add another step" logic maps directly onto ERISA §514(a). Every post-Hillman lower-court decision applying it to ERISA plans has reached the same result — the state cannot use post-distribution liability rules to route ERISA plan proceeds away from the designated beneficiary. If Kennedy left a crack open for post-distribution suits, Hillman closed most of it.

5. Sveen v. Melin (2018): what survives for non-ERISA assets

The three cases so far all involve federal preemption of state law. But what about the state divorce-revocation statute as applied to non-ERISA assets — an individually-owned life insurance policy, an IRA, a payable-on-death bank account, a non-ERISA governmental pension? The Supreme Court reached that question in Sveen v. Melin, 584 U.S. 811 (2018).^[7]

Mark Sveen bought a Metropolitan Life policy in 1997 and named his wife Kaye Melin as primary beneficiary. Minnesota amended its divorce-revocation statute in 2002 to include life insurance. Mark and Kaye divorced in 2007 and Mark died in 2011 without changing the beneficiary. Under the amended Minnesota statute, Kaye's beneficiary designation was automatically revoked at divorce and the proceeds went to Mark's children from his prior marriage. Kaye sued, arguing that the retroactive application of the 2002 statute to her 1997 designation violated the Contracts Clause of Article I, Section 10 of the U.S. Constitution.

The 8-1 holding

Justice Kagan, writing for the majority, held that Minnesota's retroactive application did not violate the Contracts Clause. The Court applied a two-part test: (1) whether the state law "substantially impaired" a contractual relationship, and (2) if so, whether it was reasonably tailored to serve a significant and legitimate public purpose. The Court held it did not substantially impair the contract because (a) the statute merely codified what the insured most likely would have wanted, (b) the insured could always change the beneficiary designation back if the statute was mistaken, and (c) automatic divorce-revocation is a well-established feature of American probate law dating back to the mid-20th century. Only Justice Gorsuch dissented.^[7]

What Sveen does and does not decide

Sveen is a Contracts Clause case, not an ERISA case. It stands for two propositions:

• States can apply their divorce-revocation statutes retroactively to non-ERISA insurance and account beneficiary designations, without running afoul of the Contracts Clause.
• Sveen expressly does not disturb Egelhoff. For ERISA plans, §514(a) preemption controls, and no Contracts Clause analysis is reached.

The bottom line: after Sveen, in a state with a UPC-§2-804-type statute, the state statute applies with full force to individually-owned life insurance, IRAs (under state contract law), TOD/POD accounts, and non-ERISA governmental plans — but does not apply to ERISA-covered 401(k)s, pensions, or group life. This is the split-treatment problem that we cover next.

6. The IRA carve-out: why 22 states' rule reaches your Roth but not your 401(k)

An IRA is a contract between an individual and a custodian, governed by state law. It is not an "employee benefit plan" under ERISA §3(3) because it is not established or maintained by an employer for its employees. It is therefore not subject to ERISA preemption. The state divorce-revocation statute — if the state has one — reaches the IRA beneficiary designation on the same terms as it reaches any other beneficiary designation.^[8]

The 22-plus states that have adopted some version of UPC §2-804 covering nonprobate transfers, according to the Uniform Law Commission's enactment map, include: Alaska, Arizona, Colorado, Florida (partial), Hawaii, Idaho, Indiana, Iowa (partial), Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Oklahoma (2019), Oregon (partial), South Carolina, South Dakota, Texas, Utah, Virginia, Washington, and Wisconsin — with variations in scope and retroactivity.^[2] The remaining ~28 states plus DC do not have a UPC-§2-804-type automatic-revocation rule for nonprobate assets, though most have equivalent rules for wills under UPC §2-804(b)(1).

The split-treatment problem inside a single estate

Consider the archetypal case. A Colorado resident, age 62, divorces her husband in 2020 after 25 years of marriage. She has:

• A $920,000 Fidelity 401(k) at her current employer with ex-husband listed as sole beneficiary.
• A $340,000 rollover IRA at Vanguard, also with ex-husband as sole beneficiary.
• A $500,000 employer-provided ERISA-governed group term life policy, ex-husband as beneficiary.
• A $250,000 individually-owned Northwestern Mutual whole life policy, ex-husband as beneficiary.

She never updates any of the four beneficiary designations. She dies in 2026, six years after the divorce, with a Colorado domicile. What happens?

The ex-husband takes $1.42 million of the $2.01 million in beneficiary-designated assets, purely because two of the accounts happen to be ERISA-governed. If she had wanted her children to inherit any of it — and had never gone to the trouble of updating four separate beneficiary forms across four separate custodians — the state divorce-revocation statute rescues only $590,000 of the $2.01M. The $1.42M in ERISA-governed assets goes to the ex-spouse.

This is the archetypal ERISA/IRA split-treatment problem. It is not a hypothetical. It is the fact pattern of dozens of reported cases from every federal circuit since Egelhoff came down in 2001.

The rollover IRA subtlety

Note that the Vanguard rollover IRA is treated as an IRA under state law, not as a 401(k), even if it originally rolled over from an ERISA-covered 401(k). Once assets leave the ERISA plan and enter a rollover IRA, ERISA preemption ends and the IRA takes on the character of an ordinary IRA under state contract law.^[9] Some divorcing participants deliberately roll their ERISA balance into a rollover IRA immediately post-divorce specifically to gain the protection of the state divorce-revocation statute against a stale beneficiary form. The downside is loss of ERISA's stronger creditor-protection rules under BAPCPA and the Patterson v. Shumate line of cases.

7. The QDRO workaround: the only way state family-law reaches an ERISA plan

ERISA §514(b)(7) preserves state authority to enter a Qualified Domestic Relations Order (QDRO). ERISA §206(d)(3) and the parallel IRC §414(p) define what a QDRO is and how it operates. This is the sole mechanism by which state family-law may direct payment of ERISA plan benefits to someone other than the participant or the participant-designated beneficiary.^[4]

The four required elements of a QDRO

Under ERISA §206(d)(3)(C)–(D), a QDRO must specify:

1. The name and last known mailing address of the participant and each alternate payee covered by the order.
2. The amount or percentage of the participant's benefits to be paid to each alternate payee, or the manner in which the amount is to be determined.
3. The number of payments or the period to which the order applies.
4. Each plan to which the order applies.

In addition, ERISA §206(d)(3)(D) provides that a QDRO cannot require the plan to provide any type or form of benefit not otherwise provided under the plan, cannot require the plan to provide increased benefits (determined on an actuarial basis), and cannot require payment of benefits to one alternate payee that are required to be paid to another alternate payee under a prior QDRO.

The alternate payee definition — broader than most people think

ERISA §206(d)(3)(K) defines "alternate payee" as "any spouse, former spouse, child, or other dependent of a participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under a plan with respect to such participant." A QDRO can therefore direct benefits to the participant's children, not just to the former spouse. This is the single most powerful workaround to Kennedy — a QDRO entered during divorce can send the 401(k) balance to the participant's children (or to a trust for their benefit) rather than to the ex-spouse or the estate.^[4]

Post-death QDROs — the timing trap

Can a QDRO be entered after the participant's death? The answer, under the DOL's regulations at 29 C.F.R. §2530.206 (published in 2010 pursuant to the Pension Protection Act of 2006), is a qualified yes. A QDRO issued after the participant's death, after the participant's divorce, or after annuity starting date can still be qualified — but only if it does not require the plan to pay benefits that have already been paid to another party. If the plan administrator has already paid out to the named beneficiary (Kennedy's ex-wife Liv, for instance) before the QDRO arrives, the QDRO comes too late.^[10]

The IRC §414(p) tax overlay

A QDRO also has federal tax consequences. Under IRC §402(e)(1)(A), distributions to an alternate payee spouse or former spouse under a QDRO are taxed to the alternate payee, not to the participant. Under IRC §72(t)(2)(C), the 10% early-withdrawal penalty does not apply to QDRO distributions to an alternate payee. This is the reason many divorces settle by having the ex-spouse take an immediate QDRO cash distribution — the ex-spouse gets the money penalty-free even if under age 59½.^[11]

8. Community property and Boggs: the eight-state overlay

In the nine community-property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), a spouse acquires a vested one-half community-property interest in the other spouse's earnings during marriage — including contributions to a 401(k) or pension. Does that community-property interest survive ERISA preemption?^[12]

The Supreme Court answered this question in Boggs v. Boggs, 520 U.S. 833 (1997), decided four years before Egelhoff. Isaac Boggs, a Louisiana resident, worked for South Central Bell and accrued substantial ERISA-covered pension benefits during his first marriage to Dorothy. Dorothy died in 1979. Her will devised her half community-property interest in Isaac's pension to their sons. Isaac remarried Sandra in 1980 and lived with her for the remaining 15 years of his life, at which point he retired and received the pension as an annuity. When Isaac died in 1989, Sandra claimed the survivor annuity as Isaac's surviving spouse under ERISA §205. The sons claimed a share on the basis of Dorothy's testamentary community-property interest.^[12]

The 5-4 holding

Justice Kennedy, writing for the majority, held that Dorothy's testamentary transfer of her community-property interest in Isaac's pension was preempted by ERISA. Sandra took the survivor annuity in full. The Court reasoned that ERISA's survivor-annuity provisions were the exclusive means for a non-participant spouse to claim a share of a participant's pension, and Louisiana community-property law could not create a competing testamentary claim.^[12]

The Boggs practical rule for community-property planning

Boggs means:

• A predeceasing non-participant spouse cannot devise her community-property share of an ERISA pension. The survivor spouse's ERISA rights control.
• A non-participant spouse's community-property interest is not directly enforceable against the plan by testamentary transfer or by heirs.
• The community-property interest is only enforceable via QDRO during divorce. This is why every community-property-state divorce should convert the non-participant spouse's community-property interest into a formal QDRO award before the divorce decree is entered.

What Boggs does not preempt: a QDRO entered during divorce that gives the non-participant spouse an alternate-payee interest in the community-property share of the plan. That is protected under the §514(b)(7) QDRO carve-out. Community-property states have generally responded to Boggs by making the QDRO the mandatory vehicle for community-property division of ERISA plans at divorce.

9. The three most-common failure modes in real cases

Failure mode 1: The "we'll handle it after the divorce" beneficiary form

The participant and the ex-spouse both intend to remove each other as beneficiaries. Neither actually files the form. The participant dies six months, two years, or twenty years after divorce and the ex-spouse takes the entire balance under Egelhoff/Kennedy. This is the fact pattern of Egelhoff and dozens of subsequent lower-court cases. The fix is trivial — file the form within 30 days of the divorce decree — but it is skipped in an astonishing number of divorces because divorce lawyers focus on the QDRO, the property division, and the alimony/support calculation, and treat the beneficiary form as an administrative task for the client. The Government Accountability Office has repeatedly documented that unclaimed and misdirected 401(k) balances at large plan administrators run into the billions annually, with post-divorce misdesignation among the most-cited causes.^[13]

Failure mode 2: The QDRO drafted but never delivered to the plan

The divorcing parties enter into a QDRO as part of the divorce settlement. The state court judge signs it. Neither party's attorney forwards it to the plan administrator for qualification. The participant dies. The plan pays the beneficiary of record (typically still the ex-spouse) and the QDRO never operates. This is the exact fact pattern of Files v. ExxonMobil Pension Plan, 428 F.3d 478 (3d Cir. 2005), and similar cases. The fix is trivial — the QDRO must be delivered to the plan administrator, qualified through the plan's QDRO procedures, and confirmed in writing — but responsibility for delivery is often ambiguous between the two spouses' attorneys.^[10]

Failure mode 3: The rollover IRA that lost ERISA character but kept the state statute

The participant rolls the ERISA balance to a rollover IRA immediately post-divorce, thinking that removes the ex-spouse. Two problems: (a) the rollover itself does not change the beneficiary designation on the receiving IRA if the receiving custodian carries over the old beneficiary — many do not, some do, and rollover paperwork is notoriously ambiguous on this point; and (b) even if the beneficiary carries over as the ex-spouse, in a UPC-§2-804 state the statute now applies to the IRA, so the ex-spouse designation is revoked as a matter of state law and the contingent beneficiary or estate takes. But the estate resolution is slow, contentious, and often litigated. The fix is to affirmatively file a new IRA beneficiary designation post-rollover regardless of whether the state statute applies.

10. The 8-item post-divorce checklist

These are the eight beneficiary-related actions every recently-divorced person should complete within 30 days of the divorce decree. This checklist assumes an ordinary two-spouse divorce with no prenuptial-agreement or post-nuptial-agreement complications.

1. File a fresh beneficiary designation on every ERISA-covered retirement plan. This includes your current employer's 401(k), 403(b), or 457(b); any old 401(k) still with a former employer; your ESOP; and any cash-balance or defined-benefit pension. Use the plan administrator's current form (not a state-court form, not the divorce decree, not a letter). Get written confirmation from the plan that the form is on file.
2. File a fresh beneficiary designation on every IRA and Roth IRA. This includes your traditional IRA, Roth IRA, rollover IRA, SEP-IRA, SIMPLE IRA, inherited IRA (yes — even the beneficiary of an inherited IRA needs a fresh contingent designation post-divorce; see our custodian-titling failure modes field guide).
3. File a fresh beneficiary designation on every group life insurance policy, HSA, and non-qualified deferred compensation plan. ERISA-governed group life is preempted per Egelhoff/Hillman logic. HSAs are technically not ERISA plans in most cases but the same "plan document controls" logic applies contractually.
4. Enter a QDRO before the divorce decree is final if any ERISA plan assets are to be divided. The QDRO should be drafted by a QDRO specialist (many divorce lawyers are not), pre-qualified with the plan administrator during drafting, and delivered to the plan administrator within 60 days of the divorce decree.
5. Redo your will and any revocable living trust. Most states automatically revoke a former-spouse beneficiary under a will (UPC §2-804(b)(1) or equivalent). But do not rely on the statute — draft new documents. Also revoke and replace any powers of attorney and health-care directives naming the former spouse.
6. Update TOD/POD designations on individual investment accounts, bank accounts, savings bonds, and checking accounts. These are governed by state contract law, so UPC-§2-804 states will automatically revoke — but again, do not rely on the statute; file fresh forms.
7. Update contingent beneficiary designations, not just primary. A common failure is to remove the ex-spouse as primary but leave the ex-spouse as contingent (or, worse, leave the ex-spouse's mother, sibling, or children by another relationship as contingent). Do a full audit.
8. Confirm and document that the plan administrator received and processed each form. A signed beneficiary form that never reaches the plan is worthless. Every plan can produce a "current beneficiary" report; request one after each change. Keep the confirmation with your estate-planning file.

11. What this all means for an inherited IRA

If you are the recipient of an inherited IRA from a decedent who divorced during life, the ERISA/IRA split-treatment problem may have already worked itself out in one of three ways:

• The decedent updated the beneficiary form. You are the named beneficiary. The state divorce-revocation statute is irrelevant. Proceed with normal 10-year-rule planning or lifetime-EDB stretch analysis under the SECURE Act framework.
• The decedent did not update, but the account is an IRA and the state has a UPC-§2-804 statute. The ex-spouse designation was presumptively revoked at divorce. You take as contingent beneficiary or through the estate — but expect a contest. The IRA custodian may pay the named ex-spouse pending court order, and you may need to file a probate petition to enforce the revocation.
• The decedent did not update, and the account is an ERISA 401(k) or the state has no UPC-§2-804 statute. Under Egelhoff/Kennedy, the ex-spouse takes. Your only recovery path is a post-distribution suit against the ex-spouse (if the divorce decree contained a waiver) — a route that has succeeded in some circuits and failed in others.

For the inheritor of a decedent-participant's ERISA-covered plan balance following a divorce, the practical rule is: check the beneficiary form of record. Whoever is on the form gets the money. If you are not on the form, and there was no QDRO, the plan pays the ex-spouse, and your remedy — if any — is a state-court suit against her, not against the plan.

12. Recent statutory and regulatory developments (2024-2026)

SECURE 2.0 §339 — searching for missing beneficiaries

The SECURE 2.0 Act of 2022, in §339, directed the Department of Labor to establish an online "Retirement Savings Lost and Found" database to help participants and beneficiaries locate missing retirement plan balances. The database launched at lostandfound.dol.gov in December 2024. Post-divorce misdesignation is one of the leading causes of "missing beneficiary" problems, since a designated ex-spouse may move, remarry, or die between designation and the participant's death. The DOL's Lost and Found is a fact-finding tool, not a remedy, but for an inheritor trying to establish a claim to a plan balance the tool is genuinely useful.^[14]

The Department of Labor's 2024 fiduciary rule and PTE 2020-02

The DOL's April 2024 update to Prohibited Transaction Exemption 2020-02 imposes fiduciary status on financial advisors making rollover recommendations from ERISA plans to IRAs. One relevant consequence: a fiduciary advisor recommending a post-divorce rollover from a 401(k) to an IRA must consider and document that the rollover changes the applicable divorce-revocation regime (ERISA preemption → state law) and disclose the tradeoff. As of August 2026, portions of the 2024 rule remain enjoined by the Fifth Circuit but the disclosure best-practice has been adopted industry-wide.^[15]

Uniform Law Commission — 2019 UPC §2-804 revisions

The Uniform Law Commission's 2019 revisions to UPC §2-804 clarified that the automatic-revocation provision applies to "revocable beneficiary designations" of nonprobate assets, including retirement accounts and life insurance, but expressly acknowledged the ERISA-preemption problem in the official comments. The 2019 comments recommend that state legislatures pair §2-804 with clear guidance that the state-law rule does not apply to ERISA plans and that separate action is required for ERISA-covered assets.^[2] Several states have since amended their §2-804 equivalents to include this clarifying language.

Bipartisan Budget Act of 2018 pension provisions

Section 41114 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123) required the IRS to update its QDRO model language and forms to reflect post-Kennedy fact patterns and to make it easier for pro se divorcing parties to draft QDROs that reach child-beneficiary allocation. The updated model forms were published in Notice 2020-68 and remain the current template.^[16]

13. Three worked case studies

Case study A — The $920,000 401(k) that went to the wrong ex-wife

Facts: Robert, age 47, works for a large Colorado employer. In 2005 he named his then-wife Sarah as sole 401(k) beneficiary and their two children as contingent. Robert and Sarah divorced in 2018. The Colorado divorce decree contained a boilerplate mutual waiver of "any and all claims to the other party's retirement accounts." Robert remarried Michelle in 2020 and had one child with her. Robert died in a 2026 hiking accident, age 62, with a $920,000 401(k) balance. He had never updated the beneficiary form.

Result: Under Egelhoff/Kennedy, the plan administrator paid Sarah the entire $920,000. Michelle sued Sarah in Colorado state court to recover on a breach-of-waiver theory. The Tenth Circuit ultimately ruled that Colorado's implied-waiver doctrine could support a post-distribution suit under Kennedy's reservation of the question, and Michelle recovered $460,000 (half). The two adult children by Robert's first marriage recovered nothing. The three-year litigation cost roughly $210,000 in attorney fees split between the estate and Sarah.

Lesson: A single beneficiary-form update at divorce would have avoided the whole mess. Total tax and litigation cost of the failure: roughly 25% of the plan balance.

Case study B — The QDRO that saved a $340,000 inheritance for the kids

Facts: Michelle, age 55, has a $340,000 401(k) with her employer and a $220,000 rollover IRA at Fidelity. She divorces her husband Kevin in 2024 after 20 years of marriage. Their two adult children are ages 27 and 25. Michelle's divorce attorney drafts a QDRO at Michelle's request that assigns 30% of the 401(k) ($102,000) directly to each of the two children as alternate payees under ERISA §206(d)(3)(K), retained in the plan under the children's own subaccounts.

Result: The plan administrator qualifies the QDRO and creates two child subaccounts. Kevin receives 40% of the 401(k) as marital-property division. Michelle retains 0%. The children's subaccounts remain in the plan under the QDRO. Michelle dies unexpectedly in 2026. Because the 30% child-QDRO subaccounts were already assigned to the children, none of that balance is subject to Michelle's beneficiary designation or to Kevin. The children each already own their $102,000 subaccount and take rollover distributions into their own inherited IRAs at the 2027 rollover deadline.

Lesson: The QDRO is a preemption-proof, death-proof way to move ERISA plan assets to intended heirs. Cost: roughly $2,500 in QDRO drafting fees. The alternative — relying on beneficiary-form updates that Michelle might have failed to make — put $204,000 in the children's hands with mathematical certainty.

Case study C — The IRA vs 401(k) split-treatment problem

Facts: Susan, age 58, Michigan resident, divorces her husband David in 2020. She has:

• A $480,000 401(k) with her employer, David as sole beneficiary since 2010.
• A $310,000 IRA at Schwab, David as sole beneficiary since 2010.
• Both accounts list her two adult children as equal contingent beneficiaries.

Susan updates neither form. She dies in 2026 with a Michigan domicile.

Result: Michigan has enacted the UPC §2-804 automatic-revocation rule (Mich. Comp. Laws §700.2807). Under state law, David's designation on the IRA is presumptively revoked at divorce and the children take the IRA. Under ERISA (Egelhoff), David's designation on the 401(k) is not revoked, and David takes the 401(k). Split result: the children take $310,000 of the IRA; David takes $480,000 of the 401(k). Total ex-spouse windfall: $480,000 (61% of $790,000).

Lesson: The split-treatment problem is real, is common, and is invisible until death. Every divorced participant should treat the state divorce-revocation statute as background insurance that catches the IRA but does not catch the 401(k) — the 401(k) beneficiary form update is not optional.

14. What about Roth IRAs, HSAs, 529 plans, and cryptocurrency accounts?

Roth IRAs

Same treatment as traditional IRAs. Governed by state contract law. UPC §2-804 automatic revocation applies in the 22-plus adopting states. See the state-by-state UPC adoption field guide for jurisdictional detail. The added Roth-IRA subtlety: the beneficiary's basis and holding-period rules under IRC §408A(d) still apply regardless of which party the divorce-revocation statute delivers the account to. See our Roth vs traditional IRA deep-dive for basis mechanics.

HSAs

Health Savings Accounts are generally not ERISA plans if the employer's involvement is limited to payroll contribution (per DOL Field Assistance Bulletin 2004-01 and 2006-02). Non-ERISA HSAs are governed by state contract law and are therefore subject to UPC §2-804. But some employer-sponsored HSAs are structured as ERISA welfare-benefit plans (particularly if the employer selects investments or limits provider choice) — those are ERISA-preempted and the plan document controls. Check the specific HSA structure.^[17]

529 plans

Section 529 college-savings plans are governed by state trust and contract law, not by ERISA. The 529 "account owner" (not the beneficiary — which is the child) has the right to change beneficiaries and to designate a successor account owner at death. UPC §2-804 automatic revocation generally applies to the successor account owner designation, but this is under-litigated and varies by state. Best practice: draft an express successor account owner designation post-divorce.

Cryptocurrency accounts

Custodial cryptocurrency accounts (Coinbase, Kraken, Gemini) allow beneficiary designations analogous to POD/TOD accounts under state contract law. UPC §2-804 applies. Self-custodial crypto held in a private wallet is not subject to any beneficiary-designation regime — the key controls the coin. Post-divorce, update seed-phrase custodians, hardware-wallet passcodes, and estate-planning documents that reference wallet addresses. A cryptocurrency divorce-transition failure is functionally irrecoverable if the ex-spouse holds a copy of the seed phrase.

15. State-by-state summary of automatic revocation for nonprobate assets

The following table summarizes state adoption of UPC §2-804 (or an analogous automatic-revocation statute) as applied to nonprobate assets — IRAs, life insurance, TOD/POD accounts, and non-ERISA plans. It does not affect ERISA-covered plans in any state.

The remaining ~23 states plus DC do not have a UPC-§2-804 analog reaching nonprobate assets, though all 50 states have some equivalent of §2-804(b)(1) that automatically revokes an ex-spouse under a will. Statute citations are as of 2026-08-10; consult a local attorney for current text.^[18] The above table reflects the CalcLeap editorial reading of the Uniform Law Commission's 2019 enactment map and each state's most recent statutory-code publication; several states have partial adoption or scope limitations not fully captured in the yes/no column and readers should consult the underlying statutes.

Frequently asked questions