State Law Considered for QDROs for Domestic Partners
May 23, 2014 (PLANSPONSOR.com) — The Alaska Supreme Court ruled unmarried domestic partners have a right to some retirement benefits via a qualified domestic relations order (QDRO).
The
top Alaska court agreed with an earlier ruling that insurance death benefits
and 401(k) retirement accounts are not to be considered domestic partnership
assets and therefore should not be subject to division through a qualified
domestic relations order (QDRO). However, both the upper and lower courts
agreed that accrued union pension benefits can be considered domestic
partnership assets and are therefore subject to division between separating
domestic partners.
The
court cited a previous ruling from the 9th U.S. Circuit Court of Appeals to
back up its decision, Owens v. Auto
Machinists Pension Trust, which concerned an unmarried couple who had
cohabited for 30 years. In that case, the court determined that the woman
should receive half of the man’s monthly payments from an Employee Retirement
Income Security Act (ERISA)-covered pension acquired during the relationship.
When the woman sought her portion, the pension fund administrator notified her
that because the couple had not been married, the trial court’s order was not
enforceable under ERISA. The woman filed and prevailed on a judgment action in
federal district court, and the plan administrator appealed to the Ninth
Circuit.
The
9th Circuit, in turn, started its analysis by noting that ERISA only recognizes
orders that relate to “marital property rights” and concern an “alternate
payee,” which is defined to include an “other dependent.” The case therefore
turned on the meaning of “marital property rights” and whether the woman was an
“other dependent.” The court reasoned that because federal law does not define
“marital property rights,” the court must apply state law to define the term.
This led the court concluded that “Washington recognizes quasi-marital
relationships for purposes of property division,” case documents show.
The QDRO questions in
Raymond Boulds vs Elena Nielsen reached
Alaska’s Supreme Court on appeal from the Superior Court of the State of Alaska.
According to the court opinion, defendant Raymond Boulds and plaintiff Elena
Nielsen were unmarried cohabitants for 16 years and raised several children
together. When their relationship ended, they litigated child custody and
property ownership. Substantial disagreement arose when it came to dividing up
Boulds’ three distinct retirement benefits, which included an insurance death
benefit, a 401(k) account and an accrued union pension benefit.
In
short, the superior court decided that, under the rules set out in ERISA, only
Boulds' pension benefits can be divided through a QDRO. Boulds, not wanting to
divide any of his retirement benefits, appealed the decision.
When
Boulds was first hired by his employer, he listed Nielsen as his intended
pre-retirement death beneficiary for the union pension, even though the form
specified that only a spouse, child, parent, or sibling could be listed.
Boulds’ employer told him approximately one year later that he could not list a
cohabitant. He then listed his children as the beneficiaries.
After
the relationship ended the parties engaged in a series of child custody and
property division proceedings. The lower court determined that the employment
death benefit and 401(k) account were Boulds’ separate property and that the
union pension was partnership property. The court divided the domestic
partnership assets equally, but has not yet issued an order dividing the union
pension.
In
his appeal, Boulds argued that federal law prohibits dividing his union pension
with a non-spouse, and that the superior court misapplied Alaska law by
examining only Boulds’ own initial intent to share the union pension with
Nielsen for the benefit of their children. Boulds argued that the superior
court erred in determining that Nielsen was entitled to part of his union pension
for two reasons, first because ERISA prohibits division of a federal retirement
account with a non-spouse, and second because the court erred by determining
that the parties intended the union pension to be a partnership asset. The
supreme court ruled neither of these arguments has merit.
"Boulds argues
that the superior court lacked authority to award any of the union pension to
Nielsen because 'it is illegal under ERISA,' which Boulds argues preempts state
law. We assume Boulds is contending that cohabitants cannot hold 'marital
property' and that Nielsen does not qualify under the enumerated domestic
relations order recipient categories. Boulds is incorrect. The superior court did
not err when it divided the union pension between cohabitants under Alaska law,
and this outcome is not inconsistent with ERISA," the court opinion
states.
The
text of the Alaska Supreme Court decision is available here.