ERISA Pre-emption where participant murders spouse

[TamB]

Does anyone know whether federal law has any help for the estate of a murdered spouse, where the murdering spouse was the ERISA plan participant, and community funds were used to contribute to the 401(k)?  It does not seem right that federal law would allow a murdering plan participant's benefits to be protected from a state claim by the murder victim/spouse. 

[Mike Preston]

I think you will find that what you think doesn't seem right is in fact very right.  I believe the most widely known example is the OJ case.  As I understand it, the Goldman's have had no luck getting their hands on OJ's pension assets.  I wonder if they attempted a retroactive QDRO?  That would have been an interesting court decision.

[TPAJake]

I once had a case the opposite of that, where the murdered spouse was the Participant & the Employer refused to honor the murdering spouse's claim as beneficiary.  Big mess, took years.  

[My 2 cents]

27 minutes ago, TamB said:

Does anyone know whether federal law has any help for the estate of a murdered spouse, where the murdering spouse was the ERISA plan participant, and community funds were used to contribute to the 401(k)?  It does not seem right that federal law would allow a murdering plan participant's benefits to be protected from a state claim by the murder victim/spouse. 

I don't usually work with 401(k) plans, but is it not inaccurate to say that community funds were used to contribute to the 401(k)?  Wouldn't the contributions be salary reduction amounts taken from the participant's earnings (which, I would think, are not community funds at all, at least until they have come into the participant's hands)?  Not that it makes much difference.

[david rigby]

There may be prior relevant discussion threads.  Use the "Search" feature, using keyword "murder" and/or "slayer".

 

[Mike Preston]

2 minutes ago, My 2 cents said:

I don't usually work with 401(k) plans, but is it not inaccurate to say that community funds were used to contribute to the 401(k)?  Wouldn't the contributions be salary reduction amounts taken from the participant's earnings (which, I would think, are not community funds at all, at least until they have come into the participant's hands)?  Not that it makes much difference.

It can make a huge difference.  And besides, no, you've got the whole universe of community interest on its heels with your assertion that monies have to come into the participant's hands before being a part of the community.  Did you really mean that?

[ESOP Guy]

If the murder case is still not fully resolved the family MIGHT try and get the prosecutor on their side.  If that happens and as part of any plea deal (if there is one) it can cover the assets as long as it respects the anti-alienation rules.  That is to say the distribution would have to be to the participant and then they are obviously free to do what they want with the cash. 

I had many years ago a bank that had an ESOP.  One of their tellers embezzled a large sum of money.  The only assets she had that was close to enough was her 401(k) and ESOP balances combined.  As part of the plea agreement, the teller pleads guilty and for a reduced sentence she agreed to take a distribution from both the 401(k) plan and ESOP and deposit the funds into a savings account of her former employer.  The money was then turned over to the bank. 

I can imagine a prosecutor being less willing to go for a reduced sentence on a murder but the family does make a sympathetic group. 

[RatherBeGolfing]

The closest I can get to a citation that is somewhat relevant is Mack v. Kuckenmeister, a 9th Circuit case from 2010.  In Mack, the the Participant murdered his wife before their divorce was final.  Before the murder, Participant had agreed to name the wife the alternate beneficiary, but a QDRO had not yet been issued.  The estate filed a motion to have a QRDO issued retroactively which was granted and appealed all the way to the 9th Circuit which held that state court has jurisdiction to determine whether an order is a QDRO.

It may be something to consider but the best advice you can get in here is to to consult an attorney licensed to practice in your state.

 

[Peter Gulia]

If ERISA governs the retirement plan, a State’s community-property law ought not to apply in deciding the plan’s payment.

 

However, States’ laws might apply in sorting out whether the plan’s distributee must pay over to a person who is a rightful taker under State law.

 

Although ERISA preempts State laws, some courts treat a State’s slayer rule as not preempted or finds a slayer rule is included under the Federal common law of ERISA.  For example:

 

Mendez-Bellido v. Trustees of Div. 1181, A.T.U. Pension Fund, 709 F. Supp. 329 (E.D.N.Y. 1989);

 

New Orleans Elec. Pension Fund v. DeRocha, 779 F. Supp. 845 (E.D. La. 1991);

 

New Orleans Elec. Pension Fund v. Newman, 784 F. Supp. 1233 (E.D. La. 1992);

 

Addison  v. Metropolitan Life Ins., 5 F. Supp. 2d 392 (W.D. Va. 1998);

 

H.E.B. Inv. & Ret. Plan v. Harris, 217 F. Supp. 2d 759 (E.D. Tex. 2002).

 

At least one court held that ERISA preempts States’ slayer laws.  Ahmed v. Ahmed, 817 N.E.2d 424 (Ohio 2004).

[TamB]

Thank you all for your input.  I understand that the property contributed is not considered community property under state law without a qualified domestic relations order.  I thought of trying to allege a posthumous divorce but without her being alive since no divorce proceeding was underway, that will be next to impossible.  The murderer in this case is the plan participant, which complicates it further.  While he had seen a divorce attorney, no divorce had been filed.  He murdered his wife and infant son after taking out numerous life insurance policies on  her life through his employer.  And he was a participant in a 401(k).  I'm trying to find out now whether her retirement plan from a previous employer is an ERISA plan. 

[david rigby]

Resurrecting this topic, https://www.plansponsor.com/erisa-not-preempt-state-slayer-laws/, this case seems to differ because of the insanity verdict.  The court upheld the most common (I think) understanding/application of a “slayer statute”.

However, I wonder if users have crafted plan language to deal with the potential of a slayer statute removing the surviving spouse (or anyone else) from benefiting under a plan?  Although this discussion thread is posted in the 401(k) Forum, the potential certainly applies to any qualified plan.  For example, many DB plans have only one pre-retirement death benefit: a QPSA “to the surviving spouse”; in such case, the plan has no authority to pay anyone else.  Any thoughts?

 

[david rigby]

More recent attorney discussion RE the interaction of ERISA with slayer statutes:

http://www.employeebenefitsupdate.com/benefits-law-update/2019/2/19/erisa-preemption-of-state-slayer-statutes-does-it-matter.html