who is privy to knowing who a beneficiary is

[Santo Gold]

We had a participant recently pass away in a 401k plan. The individual was recently separately but did not remarry (not sure if he was divorced).

We only have one beneficiary form completed by the deceased participant and he named his then-wife as the sole beneficiary. The new girlfriend is now calling up asking for the account balance because she is certain that the deceased named her beneficiary. When we explained that there is no paperwork to support her claim, she is getting upset and wants to know who is the beneficiary.

Does she, or anyone else, have the right to know this information? I wouldn't think so, as we only really need to speak to her about this if she has some "proof" that she truly is the beneficiary. Is that correct?

A similar question: what if the deceased individual was divorced and remarried, but never changed the beneficiary form. Would the new spouse still get nothing?

Thanks

[Bird]

I don't think a girlfriend has any more right to see that participant's bene des than I do.

As to the last question, most plans say the spouse is the beneficiary. Might have to be married for 1 year to be a "spouse" for plan purposes though.

[masteff]

I agree w/ Bird. I'd be curious to hear what the attys on here say but I'd even be reluctant to give it to the executor of the estate.

Several threads exist on topic of nullification of existing bene designation upon remarriage, here's one: http://benefitslink.com/boards/index.php?showtopic=44073

You might also google a case called Cajun Industries, LLC vs. Robert Kidder.

[Peter Gulia]

Although I often might give different advice based on the particular plan administrator's circumstances, here's an approach that some administrators use for an executor's inquiry.

Don't respond to a query simply because the inquirer presents himself or herself as a personal representative. First, require an original or court-certified copy of the order that made the appointment. Second, require the inquirer to give you a written assurance (under penalties of perjury and stating awareness of the criminal punishments for the Federal crime of making a false statement to an employee-benefit plan) that he or she needs the information to prepare an estate tax return that he or she is required to file. Next, read the court order you obtained and consider relevant Federal and State law about the appointee's duties to consider whether his or her statement about the tax-information need is fitting. (Whether through ignorance or deceit, an inquirer often asserts powers and duties that the inquirer doesn't have.) If there truly is a tax-return need, a plan's administrator might furnish information about the account balance, but might not reveal information about the identity of any beneficiary. To appease a personal representative who is worried about his or her duty to collect assets of the decedent's estate, a plan administrator might inform such an inquirer: "The estate is not the beneficiary." To anyone who gets belligerent, a response can be 'you're welcome to file a claim', and the administrator will react to it under the plan's claims procedure.

Consider too that an ERISA-governed plan often might legitimately decline to furnish information to anyone other than the beneficiary.

And for those who work as a recordkeeper or TPA, rather than as the named plan administrator, consider being careful to do no more than what the plan administrator has instructed you to do (whether under a particular or standing instruction).

[Santo Gold]

Thank you for all replies.

[mbozek]

We had a participant recently pass away in a 401k plan. The individual was recently separately but did not remarry (not sure if he was divorced).

We only have one beneficiary form completed by the deceased participant and he named his then-wife as the sole beneficiary. The new girlfriend is now calling up asking for the account balance because she is certain that the deceased named her beneficiary. When we explained that there is no paperwork to support her claim, she is getting upset and wants to know who is the beneficiary.

Does she, or anyone else, have the right to know this information? I wouldn't think so, as we only really need to speak to her about this if she has some "proof" that she truly is the beneficiary. Is that correct?

A similar question: what if the deceased individual was divorced and remarried, but never changed the beneficiary form. Would the new spouse still get nothing?

Thanks

Two principles are paramount to resolving this question:

1.Under the Kennedy v. Dupont decision, the determination of the beneficiary of a participant is made in accordance with the terms of the plan, not the terms of a state divorce decree.(If there was no final divorce decree at death then the spouse is the beneficiary.) If there is no provision in the plan to remove the spouse as designated beneficiary after divorce, then the spouse is the designated beneficiary. If the plan requires a QDRO to be filed to remove a spouse as designated beneficiary then the spouse will receive the benefits if no QDRO has been approved.

2. Assuming the spouse is the designated beneficary under the plan and the girlfriend is asserting that she is the beneficiary, then the plan must treat the girlfriend's inquiry as her claim for the participant's benefits under ERISA 503 and conduct the necessary claims review to determine who is the correct beneficiary. If there is only one beneficiary designation naming the spouse as beneficary and there is no provision in the plan to remove her on account of divorce then the spouse should be designated as the beneficiary of the participant's account by the plan administrator and both the spouse and girlfriend notified of the decision. This is the only way for the plan to avoid a long legal process where the GF contests the benefits. Determination of who is the beneficiary entitled to receive benefits will resolve the estate tax question.

Conducting a claims review will eliminate the question of what the GFs rights are to know who is the beneficiary since the plan will follow its claims procedure to determine who is the beneficiary.

[jpod]

Wouldn't the girlfriend have to have a "colorable" claim to have standing to sue as a beneficiary in court, and if she doesn't have such a colorable claim, why should her inquiry/claim trigger the ERISA review procedures? Of course, one first needs to figure out what "colorable" means and what the girlfriend has to demonstrate that her claim is colorable.

[mbozek]

Wouldn't the girlfriend have to have a "colorable" claim to have standing to sue as a beneficiary in court, and if she doesn't have such a colorable claim, why should her inquiry/claim trigger the ERISA review procedures? Of course, one first needs to figure out what "colorable" means and what the girlfriend has to demonstrate that her claim is colorable.

As I understand it the federal courts usually require that a person who has a colorable claim for benefits must first file for benefits with the plan under ERISA 503 in order to determine whether the claim is valid before courts will review the claim. The plan can treat an inquiry for benefits as a claim for plan benefits under 503 of ERISA and decide the validity of the claim, e.g., girlfriend claimed she was named as beneficiary. See reg. 2560.503-1(e).

[jpod]

I am questioning whether the PA must actually go through the 503 procedures. I doubt that it must or should if a frivolous claim is made, so I am suggesting that perhaps the girlfriend's inquiry/claim is on the same side of the grey line.

[Peter Gulia]

Even when it's not required, a plan's administrator might prefer to use its claims procedure. With a troublesome inquirer, running the claims procedure is an efficient way to get the inquiries to end.

Telling an inquirer 'you're welcome to put in writing your request, your explanation of whatever you believe you should get, and whatever evidence and other information you would like the plan's admministrator to consider' can be a powerful way to say (politely) 'put up or shut up' or 'what happened wasn't the fault of the plan's people'. One reason that it can be so effective is that the procedure might in fact be sufficiently open-minded and fair. In my experience (advising on about 100,000 beneficiary disputes), the inquirer/claimants recognize that the plan has offered a fair procedure and that the denial decisions were fair decisions on the evidence submitted. The procedure also allows an inquirer a moment to reflect on his or her frustruations, which often are really about the death and what the partificipant failed to do. Many claimants go away moderately content, at least feeling that they were heard.

Running that kind of claims procedure also gets some legal advantages. If a plan's administrator ran its proper claims procedure, there are significant protections if there is a court proceeding later. A court should require a plaintiff to make his or her case within the plan's administrative record (without any evidence not submitted under the claims procedure). And a court defers to a plan administrator's finding unless it is so obviously wrong that it had to be an abuse of discretion.

A participant's quasi-spouse, child, or another person who feels that the participant should have made a beneficiary designation might feel frustrated or even betrayed. Even the most secure customer service representative reacts to an emotional caller. A few dollars and a modest effort put into a procedure can help make an unpleasant situation at least manageable.

[mbozek]

I am questioning whether the PA must actually go through the 503 procedures. I doubt that it must or should if a frivolous claim is made, so I am suggesting that perhaps the girlfriend's inquiry/claim is on the same side of the grey line.

There is no consensus on what is a frivolous claim for ERISA benefits but there is no doubt that reviewing GFs inquiry as a claim for benefits under ERISA 503 and denying it on the grounds that the deceased participant had validly designated some else as the beneficiary of his 401k account will limit GFs options to pursue her claim. If she does not appeal the denial then she will be forclosed from suing in ct.

I see the above alternative as a solution to two problems: eliminating the GFs claim to benefits which would delay payment to the rightful beneficiary and facilitating the filing the estate tax return. It would also eliminate any need by the PA to become involved in responding to an inquiry by the executor of the estate as to who is the beneficiary of plan benefits.

There are other alternatives available, for example the plan admin could do nothing and wait for the GF or spouse to file a claim or deal with an executor inquiry but determining the rightful beneficiary seem to me to be the simpliest way to resolve the OPs question with no risk to the plan and the least expense.

[mbozek]

I agree w/ Bird. I'd be curious to hear what the attys on here say but I'd even be reluctant to give it to the executor of the estate.

Several threads exist on topic of nullification of existing bene designation upon remarriage, here's one: http://benefitslink.com/boards/index.php?showtopic=44073

You might also google a case called Cajun Industries, LLC vs. Robert Kidder.

Just noticed the link to the question of what is the authority for removal of non spouse beneficiaries of deceased participant who has remarried if there is no designation of spouse as beneficiary under the plan at the date of death. This question was decided by the Supremes about 25 years ago in Boggs v. Boggs where it was held that the surviving spouse's rights to benefits of the deceased spouse under ERISA trumps all other prior beneficiary designations except for a valid QDRO obtained by an ex spouse or a waiver by the surviving spouse. Plan does not need to have any specific language removing prior beneficaries designated by participant before death b/c under ERISA surviving spouse is entitled to all survivor benefits upon death of the participant in the absence of the above exceptions.