Do not assume either “the beneficiary form always wins” or “divorce automatically revokes an ex-spouse.” For an IRA, the result can depend on the governing account contract and state revocation-on-divorce law. For an ERISA-governed employer plan, federal preemption can produce a different result.

The safest operational rule is much simpler: after divorce, update every beneficiary designation directly with the custodian or plan administrator. A divorce decree should not be used as a substitute for beneficiary maintenance unless an attorney has confirmed the controlling law and order.

Why this question has two legal layers

An IRA is generally an individual contract with a financial institution and is not itself an ERISA employee benefit plan. State probate, family-property, and revocation-on-divorce statutes can therefore matter to the effectiveness of an IRA beneficiary designation. States do not all use the same rule. Texas, for example, has a statute specifically addressing a pre-decree designation of an ex-spouse as beneficiary under an individual retirement account and other financial plans.

Employer plans can be different. In Egelhoff v. Egelhoff, the U.S. Supreme Court held that ERISA preempted a Washington statute that would have automatically revoked a former spouse’s beneficiary designation for an ERISA-governed pension plan and life-insurance plan. That case is an important warning against treating IRA and 401(k) beneficiary disputes as the same legal problem.

What Egelhoff actually says

In Egelhoff, the participant had named his then-wife as beneficiary of employer-provided benefits. They divorced, but he died without changing the designation. Washington law purported to revoke the former spouse automatically. The Supreme Court held that ERISA preempted that state law to the extent it applied to the ERISA plans at issue because the statute interfered with nationally uniform plan administration.

That does not create a universal federal rule that every ex-spouse named on every IRA must be paid. An IRA is not automatically governed by ERISA simply because it is a retirement account. The case instead demonstrates why the first question must be “What kind of retirement arrangement is this?”

Example: IRA and 401(k) named to the same former spouse

Assume Jordan names a spouse as beneficiary of both a traditional IRA and a 401(k). They divorce in 2024, Jordan never changes either beneficiary form, and Jordan dies in 2026. A family member cannot safely assume the two accounts will be resolved identically. The 401(k) may be governed by ERISA plan-document rules and federal preemption, while the IRA can be subject to the custodian agreement and relevant state law.

If Jordan lived in a state with an IRA-specific revocation-on-divorce statute, the former-spouse designation on the IRA may be ineffective under that statute unless an exception applies. In another state, the designation may remain effective. Meanwhile, an ERISA plan administrator generally follows the plan documents unless a qualified domestic relations order or other controlling federal rule changes the analysis.

A divorce decree can still matter — but not in the simplistic way people expect

A decree can contain property-division provisions, waivers, or orders affecting retirement benefits. Employer plans may also be subject to qualified domestic relations orders. But a decree that says “each party keeps their own retirement accounts” does not automatically tell a custodian what to do with a beneficiary designation after death. The legal effect depends on the account type and governing law.

Texas law illustrates the point. Its Family Code includes specific rules for pre-decree designations of former spouses under IRAs and other financial plans, with exceptions where the decree itself designates the former spouse, the participant redesignates the former spouse after divorce, or another statutory exception applies. That is very different from a blanket “beneficiary form always beats divorce decree” slogan.

What to do while the original owner is alive

The best fix is administrative, not litigative. After a divorce becomes final, request a fresh beneficiary confirmation from every IRA custodian and retirement plan. Submit new forms even if the desired beneficiary did not change. Keep the confirmation. Review transfer-on-death brokerage accounts, life insurance, HSAs, annuities, and employer plans separately because each may be governed by different contract and statutory rules.

This is also the moment to review contingent beneficiaries. If the former spouse is automatically revoked under state law and no valid contingent beneficiary exists, the account can fall to the custodial default, which may be the estate or another class of relatives. That can change both probate exposure and inherited-account distribution rules.

What to do after death if the ex-spouse is still listed

  • Do not request or spend a distribution until the beneficiary dispute is resolved.
  • Get the latest beneficiary designation actually on file with the IRA custodian or plan administrator.
  • Identify whether the account is an IRA, ERISA-governed employer plan, governmental plan, church plan, or another arrangement.
  • Identify the decedent’s domicile and the state law that may govern revocation on divorce.
  • Obtain the divorce decree and any QDRO, settlement agreement, or post-divorce beneficiary redesignation.
  • Have an estate attorney compare the documents with current state law and, for an ERISA plan, federal preemption rules.

Why delay can create a second tax problem

Beneficiary litigation does not automatically suspend federal RMD deadlines. If a dispute continues into the year after death, the parties and custodian may need advice on how required distributions should be handled while ownership is contested. The September 30 beneficiary-determination date and separate-account deadlines can also matter for RMD classification.

A beneficiary dispute is therefore not only a probate or family-law issue. It can become a retirement-distribution compliance issue at the same time. The estate attorney and tax professional should coordinate rather than handling the dispute in separate silos.

Related Inherited IRA Guides

IRA disputes turn on contract, state revocation law, and federal preemption—not one universal “form always wins” rule

For an IRA, the beneficiary designation is ordinarily central because the account is a nonprobate contract. But some states have revocation-on-divorce statutes that can revoke a former spouse's beneficiary status by operation of law, and the exact statute can contain exceptions for governing instruments, court orders, or contrary intent. The outcome therefore cannot be reduced to “the beneficiary form always overrides the divorce decree.” You must identify the governing state law and the IRA agreement.

Employer plans require a separate analysis because ERISA can preempt state rules. The Supreme Court's Egelhoff decision involved an ERISA-governed plan and held that the Washington revocation-on-divorce statute at issue was preempted. That does not transform every IRA into an ERISA plan. IRAs generally are not governed by ERISA's plan-administration rules in the same way, while a 401(k) or pension may be.

Post-death litigation can also affect timing without suspending tax rules. A custodian may freeze payment while competing claimants assert rights, yet a required distribution or year-end deadline may still exist for the person ultimately treated as beneficiary. Counsel may need to address both the ownership dispute and preservation of tax options. Do not assume a pending probate or family-law case automatically extends an IRS deadline.

Evidence matters. Collect the beneficiary designation in effect at death, every later beneficiary-change confirmation, the divorce decree and incorporated settlement, any waiver language, the IRA custodial agreement, the decedent's state of domicile, and correspondence from the custodian. For an employer plan, obtain the summary plan description and administrator determination as well. Those documents let counsel analyze the correct legal layer instead of arguing from the will alone.

Do not resolve the ownership dispute by taking a distribution first

If the custodian has frozen the IRA because an ex-spouse and another claimant disagree, a taxable withdrawal is rarely a neutral way to “hold the money until court.” Distribution can change tax character and may eliminate account options. Counsel can instead ask the custodian what interpleader, restriction, or court-order procedure it follows while ownership is decided.

Also identify whether the account is truly an IRA or an employer plan that later rolled to an IRA. The governing instrument at the time of death, and whether federal plan law applied then, can determine which beneficiary rule matters.

Practical note: A waiver in a marital settlement agreement can create contractual rights between former spouses even when the custodian must initially follow the beneficiary designation or plan document. Whether the recipient must later surrender proceeds is a separate state-law question from whom the custodian pays first. That distinction is another reason not to treat “form wins” as the end of the analysis.

This is general information, not personalized tax or legal advice — a CPA or estate attorney can confirm how this applies to your specific inherited account.