DB Beneficiary Deceased

[Guest Relief]

Employee passed away while actively employed. Employee had named Sister as Primary Beneficiary and Nephew as Contingent. Plan allows for Pre-Retirement Survivor Annuity to be paid immediately, with guaranteed payments for 10 years.

We began paying a monthly Pre-Retirement Survivor Annuity to the Sister. Now the Sister has passed away prior to 10 years of guaranteed payments.

Do the remaining payments go to Employees' Contingent (nephew) or to the Beneficiary of Sister (who is NOT the nephew)?

Our Plan Document does not address this situation. It only addresses what happens if there is no Beneficiary form on file.

[david rigby]

Most plan administration that identifies a "contingent" beneficiary does so only in case the "primary" beneficiary (usually, as specified by the employee) is not surviving at the time benefits commence to a(ny) beneficiary. Often, this does not extend to identify a "secondary" beneficiary as you describe. Often, the primary beneficiary is permitted to select his/her own secondary beneficiary (if applicable).

In your case, perhaps neither scenario has been anticipated. The Plan Administrator (or administrative committee, etc) may need to create an administrative interpretation. If in doubt, don't hestitate to contact the ERISA legal counsel who drafted the plan document.

(In 30+ years, I've never seen any plan that paid a pre-retirement J&S to a sister.)

[masteff]

or to the Beneficiary of Sister (who is NOT the nephew)?

So what is the nature of the beneficiary designation made by the sister? Was it on a form provided by the plan and returned, properly completed, to the plan? If so, then by providing that form and accepting it, it would appear to me that an adminstrative interpretation was made at the time the payments were started to the sister that she had the right to name her own beneficiary (subject now only to conclusive proof in the plan text that it was allowed in error).

[Guest Relief]

The sister did complete a beneficiary designation form in 2005 when she began receiving the 10 year Certain Pre-Retirement Survivor annuity. I agree that because we acknowledged and accepted it, we will proceed to pay the sisters beneficiary rather than the employees contingent. In hind sight, the administrative staff should have done a little more leg work on this, and the Plan will be reviewed and amended as needed.

Thank you for your comments.

PS - Sisters' beneficiary is in failing health as well, so I think this whole "beneficiary of beneficiary" scenario isn't over yet! Wish me luck.

[GMK]

Good luck, Relief.