Here is situation: Participant dies - Beneficiary designation form indicates her "ex" husband is the 100% beneficiary. She was currently married to someone else at the time of her death. She willingly and knowingly left her 401K funds to her former spouse. Both current and former spouse were taking turns taking care of her before she passed away.
Question is: Does the former spouse get the same spousal options in any distribution? Specifically:
1. Rolling funds into an IRA in his name?
2. Wait to take distribution until the participant would have been 70-1/2?
3. Leave the funds in the plan ($15,000+) and take distributions using his life expectancy?
Never had a situation like this come up and I can't find anything in the regs right off the bat. Any help would be appreciated........

Before further analysis, what does the plan say about death benefits? definition of beneficiary?

...and assuming the former spouse is determined to be the beneficiary , the former spouse would not be considered a “spouse” for beneficiary purposes and could not rollover the amount to an IRA

Sorry for the obvious question, but did the current spouse sign off on the beneficiary form designating the ex-husband as beneficiary? If the current spouse did not consent, then the beneficiary designation is invalid.

What if it was a case where the beneficiary designation form was never updated to reflect that there was a "current" spouse? Would the beneficiary designation form designating the "ex-spouse" still be valid? It seems that the plan sponsor is indicating that the ex-spouse thinks he's entitled to the funds!

Does it matter what a beneficiary form says? Maybe, but likely it is more important to determine what the Plan says.

psgross - a spouse must consent to all beneficiary designations which do not name the spouse as the beneficiary. Therefore, at the time she remarried, her initial beneficiary designation form became invalid.

Doesn't the new spoouse have to be married to the participant for a full year before they are considered a spouse?

Not necessarily. The plan may use that definition, but it is not required.

This is an individually designed document and it does not specify that the participant and spouse have to be married for a year.