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Compliance January 12, 2006
QDRO Does Not Override Pre-retirement Survivor Annuity
January 12, 2006 (PLANSPONSOR.com) - The US 9th
Circuit Court of Appeals has ruled that a marital dissolution
order requiring a participant to name his children as
beneficiaries of his retirement plan is not a qualified
domestic relations order (QDRO) and does not take precedence
over his surviving spouse's right to a qualified
pre-retirement survivor annuity (QPSA).
Reported by Rebecca Moore
In the opinion, the appellate court determined that the dissolution agreement did not meet the specificity requirements of a QDRO under the Employee Retirement Income Security Act (ERISA) as well as under guidance from the Department of Labor and the IRS. The dissolution agreement did not require any action by the plans, did not assign death benefits to the children, did not specify when payments begin, did not specify the amount, calculation or form of payment, and did not deal with the QPSA issue, according to the court.
However, the court said it would give the children the ‘benefit of the doubt’ in their argument that the agreement was a QDRO. Even still, the court said, the agreement does not give rights to the children.
The appellate court pointed to the Retirement Equity Act which says that a QPSA shall be provided to a surviving spouse, and only allows the QPSA to not be provided if the spouse has consented to the designation of another beneficiary. In this case the surviving spouse had not consented to another beneficiary.
Further, the court said a QDRO could override the QPSA provision, but only by naming a former spouse and not any other person.
When the children and the participant’s second spouse, who was his spouse at the time of his death, made competing claims for benefits from his three pension plans, the plans denied the children’s claim saying that the spouse was entitled to spousal benefits under ERISA. The children took their claim to court saying that the marital dissolution agreement between their parents was a QDRO that entitled them to benefits.
The district court had ruled in favor of the children and granted them benefits. The appellate court reversed the lower court’s decision and remanded the case back to the lower court for review.
The opinion in Hamilton v. Washington State Plumbing & Pipefitting Industry Pension Plan is here .