Change of Beneficiary & spousal waiver requirements

[Guest Barge Girl]

I have a retiree who elected a 5-year Certain & Continous annuity option when he retired in late 1997. He was not married at the time he retired and he named his son the sole beneficiary for all benefits owed (pension & life.)

The retiree is now terminally ill and has called in to check the status of his benefits and has asked for a confirmation of his named beneficiaries. Typically we send beneficiary change forms along with the beneficiary confirmation because that is often the next request.

In the course of conversation with this employee, I discovered that he is now married. The change of beneficiary form I use for the pension plan includes the spousal consent section should the retiree not name his wife his beneficiary.

My question is this: Is the spousal waiver required now should the retiree choose to name someone else? Say a daughter? I think his intention is to name his wife, but the form I am using brought up the question.

[david rigby]

The frequent response is "what does the plan say?"

The likely result is that the plan will specify that no one (not the retiree, not the plan sponsor) can change the form of benefit distribution after it has begun. It likely will also permit a retiree that chooses that form (5 C&C) to elect any beneficiary he likes, with spousal approval if married. If the retiring employee is not married (at the date of commencement) then spousal signoff requirements are (probably) not relevant.

I conclude there is no spousal signoff issue now. The plan terms will determine whether the beneficiary can be changed.

[Guest Barge Girl]

The document does require spousal consent to the 5YC&C form of benefit if the retiree is married when he choose the form. The document also allows the beneficiary to be changed "from time to time" by the participant for the death benefit feature as well as the 5YC&C.

Thanks for your help, Pax.

[RCK]

There appear to be several different questions here:

1. Can the participant change the form of benefit? I've never seen a plan that would allow a change after benefits commenced.

2. Does the participant need the consent of the new spouse for the designation that he created when he was not married? No--I agree with pax.

3. If he changes beneficiaries now, does he need spousal consent? I would say yes, but am not going to be able to provide a cite for that.

RCK

[david rigby]

I disagree with RCK's conclusion (3).

The current beneficiary is not the spouse, and no spousal approval was required at the assignment of that beneficiary. Why would the retiree need the spouse approval to change now?

[RCK]

Upon further consideration, I'd like to clarify my statement.

I believe that from a legal perspective, the spousal consent only applies during the period before the participant elects a form of benefit. So for a subsequent change, no consent would be required.

But from a plan sponsor perspective, I would require spousal consent. That is, I don't want to end up in court over this one if I allow the participant to name a non-spousal beneficiary while he has a spouse. So the adminstrative committees of our plans would require spousal consent for this change.

RCK

[mbozek]

Could I ask a stupid question __ what is at issue. If the participant elected a 5 yr c & c for his life only then payments can continue beyond 5 years only if the participant is alive. If the part dies after the 5 yrs are up then there is no further payment to a beneficary. At this point there is no more than 9 months of payments left. Under the terms of the plan the part. can change the benefitcary to his spouse for any payments left after his death before the 5 years are up.

[Guest Barge Girl]

mbozek,

The only issue is whether the participant can change his beneficiary now without spousal consent since he wasn't married at the time he elected the 5YC&C.

There are only six payments left of the guaranteed 60 payments. I do think the participant intends to change the beneficiary from his son to his spouse. The reason that I posted the question was that I sent out a beneficiary change form which of course includes the spousal consent section so it got me to thinking...

This participant has cancer and may very well die before his 60 payments are complete. I sent out the change form last week and expect to get it back any day. I just wanted to be prepared. I think it might be a good idea to get the spousal consent anyway like RCK suggested.

Thanks to everyone for the discussion and help.