Divorce

[Guest pjb]

Participant elects an annuity with period certain with spousal consent naming children as beneficiaries. Participant remarries and wants to elect new spouse as bene. Does ex-spouse have any rights? Do new forms need to include spousal consent language for new spouse to change beneficiaries?

[AndyH]

If it is a life with 5, 10, or 15 years certain as the type of annuity, the document should determine whether or not the beneficiary can be changed. And make sure there was no QDRO done at the time of divorce that might further restrict the options.

[Kirk Maldonado]

Has the participant retired yet?

[Guest pjb]

yes, participant retired and has been receiving the annuity payments.

[Guest Keith N]

Was the participant married to Spouse #1 at the time of commencement? If so, Spouse #1 must have waived her rights to the QJSA or the participant couldn't have elected a period certain. Once she waived those rights, generally, he can do what ever he wants, assuming her waiver wasn't contingent on the children being name as beneficiary. If it was, and he names someone else as beneficiary, I think that nullifies her waiver and she would need to consent to a change. (I'm no lawyer, but I think this is correct.)

That being said, plans generally don't allow retired participants to change their elections after the benefits have commenced. You need to check the document and see if your plan allows it. The theory is based on adverse selections. If you give a retiree a "second bite at the apple" they will make the election that is best for them and worse for the plan. Since he elected a period certain, there isn't much of a problem, since the plan was only going to pay the benefit after his death for a limited amount of time regardless of whom the beneficiary was.

I assume he's not asking to change to form of payment to a J&S on the new spouse? This would generally not be allowed.

[Guest pjb]

Are you saying ex-spouse needs to consent to the new spouse being the beneficiary? The new spouse doesn't have any spousal consent rights to changing beneficiaries in this situation?

[Guest Keith N]

I was just saying that I have seen situations where the original spousal consent was contingent on a specific beneficiary. In other words, the spousal consent specifically states that, my (spouses) consent to the waiver of the J&S, is contingent on your (participant) selection of our son as beneficiary and that you (participant) can not change that beneficiary without my additional (spouse) consent.

All I was suggesting is that you may want to examine the actual spousal consent and see if she waived all of her rights (which is most common) or did she only waive her rights contingent on a specific beneficiary.

Again, I think it very uncommon that the Plan would permit ANY change in beneficiary after the benefits have commenced.

[david rigby]

Not sure I agree with Keith's last comment, although the rest of his answer is excellent.

Absent a conditional spousal waiver as Keith mentions, if a participant is receiving a retirement benefit under a life with 15 year certain form (for example), the plan does not care who the beneficiary is. The plan's concern is that the form of benefit cannot change.

[Kirk Maldonado]

PAX:

Would your answer change if the annuity were a joint and survivor with a 15 year period certain and the new beneficiary were 30 years younger than the original beneficiary?

[david rigby]

Yes. I should have been a bit more specific.

If the form of benefit includes a survivor benefit to a specific person, then it is unlikely any pension plan would allow a change following commencement.

[mbozek]

Shouldnt the review be based upon the provisions of the plan. If participant elected to receive benefits for a period certain the contingent beneficary only has the right to continue recieving the annuity payments for the remainder of the guarantee period after the particpant's death. Since there is no additional risk assumed by the plan because of change in the age of the contingent beneficary the plan does not care who is the contingent beneficary. Second the terms of the beneficairy designation should be reviewed to determine if the designation was revocable without the consent of the former spouse. If so then the plan can make the change. there may be an issue of whether divorce decree permits the retiree to change the beneficiary designation but that is between the parties.