Death of Participant - Beneficiary Confusion

[Guest xxiretirementservices]

BACKGROUND

We have a pension client (deferral & profit sharing), who is with a major group pension financial institution. They are using Sungard Corbel non-standardized volume submitter documents.

SITUATION

Participant died. He enrolled in the plan in March 2002, using the standard enrollment form provided by the financial institution. The back of this form has a place to write down beneficiary information, where you can fill out a primary(s) and contingent(s) beneficiaries, and sign and date the form.

In March 2002 he listed his two sons equally as primaries. He is not married.

In 2003 he filled out another beneficiary/enrollment form, and listed one of his two sons as primary.

In 2004 he filled out the form yet again, and listed his live-in girlfriend (long relationship) as primary.

In August 2004 he died.

I told the trustee he should follow the last, latest form received. Trustee is uneasy about this. One of the sons has worked for him in the recent past. The trustee called the corporate attorney. Attorney says that the beneficiary form election (the enrollment) form) should have had a statement on it saying "...a more recent election of beneficiaries cancels all prior elections...", or something to that effect. Of course, it does not have any such statement. It is a simple form. Then the attorney said turn to the SPD, and the Plan Document. They should specify how this situation should be handled. Otherwise, either the trustee can petition Probate Court to decide who gets the money (legal fees - not desired), or the trustee can just make a decision and defend it in court if someone (one of the sons) object. Obviously the trustee does not like this uncertainty, and has referred the matter back to us, the TPA. Only about $1,400 is at stake.

My own opinion is that the last, most recent expression of the participant's desires is the one that is in effect and binding, and replaces all prior unless specifically stated in writing otherwise. The attorney says this is not technically correct. We are all in the State of Ohio.

I called and e-mailed SunGard Corbel (Robert Richter). He responded that neither the SPD nor the Adoption Agreement, nor the Plan Document had any direction in it, or statement that a more recent beneficiary designation revokes an older designation. He also said that their SunGard beneficiary forms in the forms package do not have any language addressing this either. So, this question apparently cannot be answered from the plan’s documents. Mr. Richter suggested filing an Interpleader in Probate Court.

My question to the forum: has anyone experienced this before, or know of any written direction (DOL, Treasury, IRS, other)?

[Belgarath]

I'm only offering a personal opinion here.

I would flatly refuse to provide any guidance to the employer here. This is a decision to be made upon the advice of legal counsel. Apparently, he doesn't like his attorney's advice, so the heck with him.

While I completely agree that common sense would dictate that the more recent designation is the one to use, I surely wouldn't be the one advising him of this.

[QDROphile]

Sorry to be a broken record, but the decison is made by a fiduciary, not the employer. The employer could be the fiduciary, but that should not be presumed, especially because it should be avoided.

I agree that the issue of who should be advising deserves careful consideration, even if is is not given careful consideration in day to day matters.

[Belgarath]

Qdrophile - you are absolutely correct. For our plans, the employer is always the fiduciary, so I'm subject to a Pavlovian response where I equate the two on questions of this type.

[mbozek]

Benefit claims must filed with the plan fid who will make a decision based upon the plan document, and assuming the fid has discretion to make decisions on paying benefits, can base his decision on the last bene form filed prior to death or any other reasonable interpretation of the intent of deceased. Only recourse for losing claimants is to commence a lawsuit which is unlikely given the amount of money involved.