Defined Benefit Plan's S.P.D.(s) and Beneficiary Designation Form contain disqualifiers not in Plan Document

[pwitt]

Hello,

What becomes the "controlling legal document(s)" in a case  where a Defined Benefit Plan's actual  "Plan Document"  does not detail, nor address ,  specific instances under which a Beneficiary Designation Form will be considered  invalid that ARE DETAILED on the Beneficiary Designation Form itself and/or the "Plan's" Summary Plan Descriptions for many years? Thank you in advance for any responses!

[pwitt]

One final point; which is something I addressed in a previous post a couple months back, the D.B. "Plan document " DOES GRANT the Named Fiduciary seemingly all encompassing powers to make determinations of fact, determine who the "rightful" beneficiary is ,etc. etc. As I asked then : "Could the Named Fiduciary" ignore/disregard/override written conditions on THEIR OWN forms and in their own S.P.D. ? Thanks!

[QDROphile]

This sentence: "Plan document " DOES GRANT the Named Fiduciary seemingly all encompassing powers to make determinations of fact, determine who the "rightful" beneficiary is ,etc. etc." does not suggest that a named fiduciary could "ignore/disregard/override written conditions on THEIR OWN forms and in their own SPD".  The sentence does suggest that the plan document authorizes some fiduciary to create an administrative structure -- including forms -- that is not inconsistent with express plan terms. ALL plan terms have to be considered in evaluating the amount of discretion given to the fiduciary to administer the plan and whether or not some proposed action or administrative policy is within the scope of authority and not inconsistent with plan terms (reasonably interpreted).

[pwitt]

Thank you for your insight QDROphile. I guess my concern arises in the fact that the two known "overrides" by the named fiduciary/Plan administrator are their seeming disregard of two (2) separate "disqualifiers" ;  one that is clearly stated in bold print on the beneficiary designation form itself as well as being stated as well in the annual S.P.D. mailed to the original Plan Participant and the second "disqualifier" as it were, is clearly stated in the S.P.D.  So, I don't see how the named fiduciary/Plan Administrator could claim to use their "discretionary powers"  granted under the Plan document, no matter how broadly stated or all-encompasing they may be, to override specific disqualifiers that they themselves established and included in writing in  an "instrument" of the plan (beneficiary  designation form) and in supplementary documentation of the Plan (S.P.D.). 

[QDROphile]

Apologies. It looks like I misread your questions. Are you saying that (1) the fiduciary acted in disregard of provisions stated in a form and provisions stated in the SPD*, and (2) the provisions in the form and SPD were not inconsistent with core plan document adopted by the sponsor? Part of the analysis gets us into the question of what is a plan document. It still involves questions of interpretation and it still requires a reading of all of the relevant provisions in the plan and the administrative documents. I don't think this forum is conducive to that kind of review.

*There is also a question relating to the required timing for revising administrative and disclosure documents to reflect changes in the law or the plan. The fiduciaries have to act in accordance with the effective new governing standard/provision before the documents are required to catch up to the changes.

[pwitt]

No apology necessary! Yup, the named fiduciary/plan Administrator, who also happens to be the Plan's sponsor , seemingly disregarded(or overrode ostensibly via their discretionary authority) two "conditions" that were stated  in writing; in one case the "condition" that was stated would cause a Beneficiary Designation form to be returned as "invalid" was printed both on the Plan's official Beneficiary Designation Form as well as stated in writing  in multiple year's S.P.D.s .
     In the second instance, whereas some information related to the "condition" which would cause the Beneficiary Designation Form to be returned/rejected as "invalid" appeared on the Designation Form itself , the actual wording that "your Beneficiary Designation Form will be returned as invalid if....."  only appeared in several years S.P.D.s and nowhere on the Beneficiary Designation Form itself .

     In BOTH INSTANCES the actual Plan Document , makes no mention of either of the two "conditions" in question(there are other conditions mentioned in the SPD) that would cause a Beneficiary Designation Form to be considered "invalid"; the Plan Document merely states in one particular section the aforementioned "discretion" wording. So the Plan Administrator/named fiduciary, went ahead and ostensibly disbursed the funds due upon the death of the original plan participant (who died after being fully vested but before they, themselves began drawing an benefits) to an individual designated as the "primary beneficiary" on the seemingly "invalid" Beneficiary Designation Form.  If, instead, upon proper review, the plan administrator had determined that the Beneficiary Designation Form that had been submitted many,many years before the death of the plan participant by the plan participant themself was, in fact, "invalid"; then the Estate of the Plan Participant would have received the payout and not the "invalid" primary beneficiary.

 

One important final note:  I use the words "seemingly" and/or "ostensibly" with regards to the actions of the Plan Administrator inasmuch as the Plan Administrator has never FORMALLY stated, under oath or otherwise, that "they" relied upon the Beneficiary Designation Form in question (i.e. as the rationale for their choice of recipient of the plan benefit); even though the Plan Administrator DID RESPOND to a formal request for information regarding the disputed disbursement by providing the Beneficiary Designation Form with the "defects" as I outlined. Needless to say, this disputed disbursement will require further information to  be gathered to "pin down" the actions of the Plan Administrator and then proceed accordingly . I have simply been trying to research , in advance, the legality of various potential  "responses" that the Plan Administrator may give  to our formal inquiry as to the  basis for how they made their distribution. Thank you very much again for your response and information; I greatly appreciate it!

[Effen]

It would be helpful if you could just tell us what happened. 

The plan document generally trumps the SPD and administrative forms.  Sometimes things are statutory which would trump everything.   

[pwitt]

Effen, I wish I could be more specific at this time. The fact is that the Estate of the original Plan participant is currently in the process of seeking to recover the monies disbursed. What is still currently being worked out is from whom  monies will be sought (hence all the somewhat vague questions from me) and on what legal basis (hence my desire to research the legal basis, or lack thereof, of all the possible "responses" that the Plan Administrator MAY give as the rationale for their actions taken .  As somewhat lacking in actual detail the facts that I have related may seem to be, believe it or not there are still other, more nefarious actions, that were undertaken by  others (not the Estate or any of its benefactors). My hope is that after the issue at hand commences in court and if anyone is really interested,  I will be able to discuss in greater detail what actually all occurred. In all the decades of my  professional experience  in operations and compliance ( I am not an attorney; I merely worked with them professionally on a regular basis on all sorts of "issues" that were encountered by myself and senior management at the financial institutions that employed me; in this case  I am involved "personally" with the Estate of the deceased Plan participant), I don't know that I encountered a more convoluted situation with so many  moving parts as it were.  Thank you one and all for your insights, various references, and perhaps most importantly, your patience and indulgence in responding to questions that, unfortunately, cannot be related in a more precise manner currently!

[Gina Alsdorf]

If the document is ambiguous or doesn't have the information, generally it is the plan fiduciaries that have the power to interpret a document. Usually the administrative services agreements for TPAs and Recorkeepers  have some direction to the service provider from the plan sponsor, to follow standard processes and procedures or some sort of manual. That manual or those process and procedure documents will then control. They are probably available online, they usually will specify what is "NIGO"  - not in good order. Good Luck, unless you get all of the documents related this kind of thing is hard to parse. 

[pwitt]

Hi Gina,

 

thanks for your reply. To be clear the actual "Plan Document" DOES NOT SPECIFICALLY address the "items" of contention. The actual BENEFICIARY DESIGNATION FORM and/or the SPDs for several years DO CONTAIN EXPLICIT LANGUAGE that state specific "items"/"conditions" that will cause the BENeFICIARY DESIGNATION FORM to be considered "invalid" by the Plan Administrator/named fiduciary (they're one-in-the-same in this instance)

[RatherBeGolfing]

9 minutes ago, pwitt said:

Hi Gina,

 

thanks for your reply. To be clear the actual "Plan Document" DOES NOT SPECIFICALLY address the "items" of contention. The actual BENEFICIARY DESIGNATION FORM and/or the SPDs for several years DO CONTAIN EXPLICIT LANGUAGE that state specific "items"/"conditions" that will cause the BENeFICIARY DESIGNATION FORM to be considered "invalid" by the Plan Administrator/named fiduciary (they're one-in-the-same in this instance)

Are these material defects or more like a technicality that still should have caused the designation to be rejected?  Did someone forget to dot an "i" or did they turn in a designation without signing it or getting it notarized?  

[pwitt]

Hi RatherBeGolfing,

  Thanks for your reply/question. I guess it's a matter of opinion as to how "material" the defects are; without going into too much detail at this juncture, I will say that they are more "material" than say the PURELY HYPOTHETICAL instance where the Beneficiary Designation Form says "use blue ink only" and the form is filled out using a black ink pen. No doubt the Plan administrator will contend that the "defects" are, "mere technicalities" even though documents of their  own creation are the source/cause of the contended "invalidation". 😕

[pwitt]

Hi Gina,

 

Just reread your comment of earlier and I concur wholeheartedly. The Plan Document does state that the a set of Rules and Procedures will be established by the Plan Administrator. No doubt getting these particular documents , along with a statement from the Plan Administrator SPECIFICALLY stating on what basis the funds were disbursed to the party in question will be of the utmost value.

[Gina Alsdorf]

Yeah, I would request the procedure documents to the extent the Administrator could  get copies.  

[CuseFan]

It seems as if the Forms and SPD have created the administrative procedures for such items not specifically contained in the document, assuming there are no other written procedures concerning this, and the question is whether the fiduciary/plan administrator reasonably interpreted those procedures in processing the claim/form as valid given all the facts and circumstances, or acted in an arbitrary and capricious manner ignoring its own administrative procedures.

This looks like a situation that could be headed toward litigation, if not there already.

[pwitt]

On 10/22/2024 at 12:49 PM, CuseFan said:

It seems as if the Forms and SPD have created the administrative procedures for such items not specifically contained in the document, assuming there are no other written procedures concerning this, and the question is whether the fiduciary/plan administrator reasonably interpreted those procedures in processing the claim/form as valid given all the facts and circumstances, or acted in an arbitrary and capricious manner ignoring its own administrative procedures.

This looks like a situation that could be headed toward litigation, if not there already.

Hello Kenneth,

 Yes, the intent of the Estate /beneficiaries thereof is to pursue litigation. In that regard, if anyone on this site has the name or names of individuals or firms that are well versed in ERISA law and represent plaintiffs in lawsuits AGAINST Plan Administrators and practice in the Northern District of Illinois (7th Cir) , please feel free to  "message" me directly as any help in finding legal counsel would be immensely helpful! Thank you one and all who have taken the time to respond to this thread for your insights; I greatly appreciate it!!