DRO Not Qualified After Benefit Payments Start

In Langston v. Wilson McShane Corporation, Justice G. Barry Anderson of the Minnesota Supreme Court noted that Patricia Langston did not submit the DRO for qualification to the plan until after her ex-husband had remarried and retired. The high court affirmed an appellate court decision that the DRO could not be qualified because it would require a form of benefit not allowed by the plan.

The two cases most relevant to this latest decision, said Anderson, were Hopkins v. AT&T Global Information Solutions Co. and Carmona v. Carmona. Hopkins held that surviving spouse benefits vest in a participant’s current spouse at the time a participant retires. In Carmona, a DRO (domestic relations order) may not create an enforceable interest in surviving spouse benefits to an alternate payee after a participant’s retirement, because ordinarily at retirement the surviving spouse’s interest irrevocably vests. Carmona also states that a married participant can opt out of the QJSA benefit only during the applicable election period.

In his ruling, Anderson cited the fact that “in the context of QJSA (qualified joint and survivor annuity) benefits—the benefits at issue in this case—ERISA defines the applicable election period as the 180-day period ending on the annuity starting date.”

After the divorce of Gary and Patricia Ann Langston, Patricia served Wilson McShane Corporation, the plan administrator for the Twin Cities Carpenters and Joiners Pension Fund, with a QDRO to obtain half of her ex-husband’s pension benefits. The plan administrator had refused to qualify Patricia’s 2005 QDRO on the grounds that the benefits were already in pay status and had already vested. The ex-husband, Gary, had retired in 2004 and applied for benefits that same year. He had also remarried to Shelly James.

Anderson went on to say, “At the time the 2005 domestic relations order (DRO) was issued, the surviving spouse benefit was payable to Shelly James. In addition, consistent with ERISA statutory provisions…any election or waiver of surviving spouse benefits must be made during the applicable election period. The parties both agree that the 180-day election period expired before the 2005 DRO was issued. Thus, no portion of that benefit could be allocated to Langston [Patricia] without requiring the plan to pay her a type or form of benefit not otherwise provided under plan documents.”

The text of this most-recent ruling can be found here.