Court Finds That Plan Document Trumps Beneficiary Designation Forms

Plan documents generally control all aspects of a qualified retirement plan. Whether the plan document invalidates the language in other forms, such as a written beneficiary designation form, can lead to disagreement. Recently, the U.S. Court of Appeals for the Ninth Circuit had to resolve just such a case.

In Becker v. Mays-Williams, the plan participant designated his wife as his retirement plan beneficiary, but the couple later divorced. He then contacted the plan’s benefits call center and telephonically undesignated his former spouse as the beneficiary and designated his son as the new beneficiary. However, he never filled out a written change of beneficiary form before he died.

Both the participant’s former wife and son claimed to be the beneficiary. The plan administrator filed the suit in the federal court to determine the proper beneficiary, and the court ruled in the ex-wife’s favor on the basis of the deceased plan participant’s failure to complete a new written beneficiary form designating his son as the new beneficiary. The son appealed. The case turned on whether the beneficiary designation forms had the same legal authority as the retirement plan document.

The plan document stated that unmarried plan participants could change the beneficiary designation from time to time, and the summary plan description stated that this could be done by visiting the plan’s website or calling the plan’s benefits center. It also stated that, on the death of an unmarried participant, a valid beneficiary designation had to be on file with the benefits center prior to death, or the plan would disburse benefits to the participant’s estate.

The court concluded that the beneficiary designation forms weren’t themselves plan documents and that a written change of beneficiary form for unmarried participants wasn’t required. Thus, the phone call designating the son as the beneficiary was proper, and the lower court’s ruling was overturned. The lesson here: Make sure your plan document and any corresponding forms have matching language.

 

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