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Exception to Spousal Consent Due to Inability to Locate Spouse

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Under the Code and ERISA, spousal consent is not required if the spouse cannot be located. For a participant who is looking to utilize this exception, is the plan required to have the participant submit an affidavit of when s/he last saw their spouse and state in detail what efforts have been made in an attempt to locate the spouse? Or is it simply enough if a participant checks a box on the benefit election form under spousal consent which says. "I do not know where my spouse is currently located."?

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A few points one might consider in preparing to get advice.

 

Before considering what evidence would support a finding, check first whether the plan provides a cannot-be-located variation.  According to the Treasury department’s interpretation of not only Internal Revenue Code §§ 401(a)(11) and 417 but also ERISA § 205, a plan’s terms may permit a participant’s qualified election without his or her spouse’s consent if the plan’s administrator finds “that the spouse cannot be located[.]”  ERISA § 205(c)(2)(B); 26 C.F.R. § 1.401(a)-20, Q&A 27.  But not every plan so provides.

 

In deciding whether to accept a participant’s statement that his or her spouse cannot be located, a plan’s administrator must act according to its fiduciary duties.  ERISA §§ 206(c)(6), 404(a)(1).  That includes no less care, skill, prudence, and diligence than would be used a prudent person who is experienced in administering a similar retirement plan in similar circumstances.  And a duty to get expert advice if a prudent person would seek advice.

 

At a minimum, meeting those fiduciary duties might require not relying solely on a participant’s statement if the fiduciary has information that would lead a prudent retirement plan administrator to question the truth, accuracy, or completeness of the participant’s statement.  See, for example, Lester v. Reagan Equip. Co. Profit Sharing Plan & Emp. Sav. Plan, 91 Civ. 2946, 1992 U.S. Dist. LEXIS 12872, 1992 WL 211611 (E.D. La. Aug. 19, 1992).

 

And an employer/administrator might not accept the participant’s statement without first checking the records of a health plan under which the spouse might be covered.

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If you have a SSN, an address search would cost less than $20.  Seems like the least the PA could do is ask the participant for the ex-spouse's SSN and do a quick search.

If he won't give you her SSN, that is probably a pretty good indication he doesn't want to find her.  

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It may be of interest to learn that this question was included in an early Gray Book (Q&A 94-28).

Proof Required to Avoid Spousal Waiver of QJSA or QPSA -- 401(a)(11), 417

Reg. Section 1.401(a)-20 (Q&A-27) provides that spousal consent to waive a QJSA or QPSA is not required if the plan representative is satisfied that there is no spouse or that the spouse cannot be located.  In establishing to its satisfaction that there is no spouse due to divorce or legal separation, is the participant required to provide legal proof of the divorce or legal separation? 

RESPONSE: The plan administrator may rely on a certification by the participant that he is divorced or legally separated.  However, it would be a good idea to request legal proof in situations where the employer has knowledge that indicates or suggests that the participant is married.  

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Effen’s post suggests an observation:  In the Retirement Equity Act of 1984, Congress assumed there could be situations in which a person “cannot” be located.  In the early 1980s, it might have been burdensome and expensive (at least in some circumstances) to search a person’s potential whereabouts.  While the law remains the same, perhaps the facts surrounding how much care, skill, prudence, and diligence a prudent fiduciary would use (or ought to use) have changed.

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To expand upon Peter Gulia's posts just a little, remember that this is a statutory benefit for the spouse.  Even though there is the express exception, the fiduciary owes a duty to the spouse/beneficiary and compromising the benefit is to be done only with appropriate consideration for the rights and appropriate diligence in determining that the exception applies.

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I would do a missing participant-type search on the spouse first. As noted above, it is a statutory benefit for the spouse, and if spouse later appears looking for a survivor benefit, it is likely the plan gets sued for such not the participant.

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