Deceased Participant no beneficiary

[MBCarey]

I have a deceased participant who had no beneficiary on file. We were presented with a Will done 2 days before the participant died. The will was not probated and left everythiing to the deceased girlfriend and brother. However, as is normally what we do, we printed a copy of the obituitary which listed a son and grandson as survivors. The plan states that if there is no beneficiary on file that the proceeds are paid to the children of the deceased per stirpes.

This happened last year and the son has never made any claim to the father's account balance in the plan. However, yesterday, we received two DRO's in the mail from family Court requesting payment from this account to the mothers of the son's two children (decesaed grandchildren) for unpaid child support. One child we knew about, the other we did not.

Talking with our document people, they are of the opinion that until a legitimate claim is made for the account by a beneficiary, we cannot do anything with the DRO's. The account must remain in the deceased name until a beneficiary makes a claim.

Any suggestions on what is right, Should we attempt to contact the son to request that he submit a claim or is the administrator's responsibility.

Thanks. Any advice would be greatly appreciated.

[J Simmons]

Does your plan require that a putative death beneficiary actually file a claim to in fact be the beneficiary? If so, what time frame or procedure before you proceed to the plan's next default beneficiary in the line so named?

Unless the plan specifies otherwise, I think the son became the death beneficiary upon the employee's death. Given that the son was not the participant, however, I'm not sure the DRO can apply even if a QDRO. It is not based on a domestic relations law involving assets or an obligation of the participant.

[QDROphile]

The statute says "with respect to a participant" not "of a participant," but I do not know where that takes you down the line. I would start with the idea that the benefit could be assigned by QDRO, but I would also think about the implications of having a beneficiary (alternate payee) of a beneficiary (named or default) and whether or not the plan allows that. I agree that the beneficiary has an interest automatically, no claim needed. A claim may be necessary for distribution, but not the property right. The plan will have to determine the identity of the beneficiary or beneficiaries before proceeding with anything.

[MBCarey]

Thanks John for your response.

No the plan does not say anything about the beneficiary having to file a claim. For unknown benficiar, it only says that "in the evnet that all or a portion of the disrtibution payable to a Part. or Bene remains unpaid at the later of the Participants age 62 or Normal Retirement after diligent effort by the administrator to find the beneficiary, then the amount may be forfeited or if after 2004 the value does not exceed 5,000, then the amount be paid directly to an IRA. If the beneficiary is later identified, then the benefit will be restored if it has been forfeited..

Should we try to locate the son and get him to make claim? If he does, then do we honor the DRO or is there even a QDRO?

In your opinion, the DRO may not even be applicable. Is this correct? This is kind of what we thought at first.

[J Simmons]

Thanks John for your response.

No the plan does not say anything about the beneficiary having to file a claim. For unknown benficiar, it only says that "in the evnet that all or a portion of the disrtibution payable to a Part. or Bene remains unpaid at the later of the Participants age 62 or Normal Retirement after diligent effort by the administrator to find the beneficiary, then the amount may be forfeited or if after 2004 the value does not exceed 5,000, then the amount be paid directly to an IRA. If the beneficiary is later identified, then the benefit will be restored if it has been forfeited..

Should we try to locate the son and get him to make claim? If he does, then do we honor the DRO or is there even a QDRO?

In your opinion, the DRO may not even be applicable. Is this correct? This is kind of what we thought at first.

Yes. I do not think it even rises to the level of a DRO (and thus may not be a QDRO). To that extent, the second to the last sentence of my prior post (#2) should read" "Given that the son was not the participant, however, I'm not sure the order can apply." The 'of a participant' provision that I was referring to is in IRC section 414(p)(1)(B)(i) that requires, for the order to be a DRO, that it "relate[] to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant"--not to child support to a child of a child.