Lied about being married and started a QJSA

Somehow a participant started his pension on a QJSA without actually being married - he was divorced prior to initiating his benefits and apparently just lied on the application? That participant has now died and the lack of marriage discovered. No payments have been made to the would-be surviving spouse. Any thoughts about how the plan should correct for this, if at all?  The plan has not been made aware of any QDRO. It seems to me that the plan is just done now, and doesn't have any obligation to pay out the difference between what his SLA would have been and what the QJSA was. 

What does the plan document say?  Does it offer J&S benefits to non-married participants?  How does it define a "spouse".  Not sure, but I think if they were married within a year of the commencement date, she may still be considered to be a spouse.  

Is the "would-be surviving spouse" the same person as the ex-spouse? 

If the election was invalid, why do you think the plan would not be obligated to pay out the difference between the SLA and the QJSA?      

Does the plan include a provision that allows a joint-and-survivor annuity with someone who is not the participant’s spouse?

If the participant had no spouse (and no QDRO requires the plan to treat a former spouse as a surviving spouse), a qualified joint and survivor annuity is “a single annuity for the life of the participant.”

What periodic amounts would the plan have paid the participant had the plan’s administrator known there was no spouse?

There is no joint and survivor annuity for non-spouses under the plan.  There is only an SLA, and 5-year certain option on the SLA. 

I hadn't thought about the Code defining a QJSA for a non-married participant as a SLA - that is good point.  If he had been paid a SLA, he would have had a bigger monthly payment. 

24 minutes ago, Effen said:

Not sure, but I think if they were married within a year of the commencement date, she may still be considered to be a spouse.  

It seems to me that the spouse would have to have been a spouse on the ASD, whether because an actual spouse or pursuant to a QDRO.  The participant did not remarry after the divorce, so there is no other potential spouse. 

One concern I have is that there is a QDRO or at least a divorce order touching upon the benefit and no one provided it to the plan. Perhaps that is why the participant listed the ex as his current spouse, thinking that was the way to handle it. 

I am not in disagreement with any of the previous responses. However, I wanted to make the following point. The QJSA was elected by the participant's own free will whether or not the plan provided for one with respect to an unmarried participant. The Plan had no reason to believe that the facts were false at the time the election was made and therefore there was no duty on the part of the plan's fiduciaries to do an investigation. Since the participant and not the plan made the misrepresentation, why not leave the participant where he lies? I have seen a court case on somewhat similar facts that was decided by a federal trial court in the 1980s. Posthumously providing the participant with the difference between the QJSA and the SLA would amount to unjustly enriching the fraudster. Leave things where they lie!

^^ I like this, as long as one can prove it was actual fraud rather than the ol' misunderstanding.....

Curious as to how it was discovered that the participant was no longer married? Is it possible to look up the participant's divorce action to see whether or not any domestic relations order or marital support order was entered?  I think it is entirely possible that the participant thought electing a QJSA is what he was required to do because he and his former spouse agreed they'd split his benefit or at least that's what the former spouse's attorney will claim!

Please tell me if I understand you question.

"[IN AN ERISA QUALIFIED PLAN] Somehow a participant started [RETIRED AND ENTERED PAY STATUS] his pension on a QJSA without actually being married [AT THE TIME OF HIS RETIREMENT]- he was divorced prior to initiating his benefits and apparently just lied on the application? [LIED ABOUT WHAT?  ABOUT HAVING A FORMER SPOUSE ENTITLED TO SURVIVOR ANNUITY BENEFITS - HOW DO YOU KNOW THIS?] That participant has now died and the lack of marriage discovered. [BUT IN ORDER TO HAVE A SURVIVOR ANNUITY HE DID NOT NEED TO BE MARRIED AND HAVE A CURRENT SPOUSE, HE ONLY NEEDED TO BE MARRIED AND HAVE A FORMER SPOUSE - SO WHAT IS THE RELEVANCE OF THE "LACK OF MARRIAGE] No payments have been made to the would-be surviving spouse. [IF HE WAS DIVORCED PRIOR TO TO ENTERING PAY STATUS THERE MIGHT NOT BE A SURVIVING SPOUSE BUT THERE MIGHT BE A SURVIVING FORMER SPOUSE] Any thoughts about how the plan should correct for this, if at all?  The plan has not been made aware of any QDRO. It seems to me that the plan is just done now, and doesn't have any obligation to pay out the difference between what his SLA would have been and what the QJSA was.  [KEEP IN MIND THAT IF THERE WAS A MARITAL SETTLEMENT AGREEMENT OR A JUDGMENT OF DIVORCE AWARDING SURVIVOR BENEFITS TO HIS FORMER SPOUSE, THE PENSION PROTECTION ACT OF 2006 PERMITS THE ENTRY OF A POST-MORTEM/POSTHUMOUS QDRO SO THE MATTER REMAINS OPEN.]

AND KEEP IN MIND Advisory Opinion No. 1999-13A , the DOL Division of Fiduciary Interpretation Office of Regulations and Interpretations  The full Opinion can be found at https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/1999-13a.  The first line of the Opinion states

        "This is in response to your request on behalf of the UAL Corporation (UAL) and United Air Lines, Inc. (United) for an advisory opinion. Specifically, you ask how a plan administrator should treat domestic relations orders the plan administrator has reason to believe are "sham" or "questionable in nature."

Later on the Opinion continues:

        "You have asked for an advisory opinion as to whether, and if so when, a plan administrator may investigate or question a domestic relations order submitted for review to determine whether it is a valid “domestic relations order” under State law for purposes of section 206(d)(3)(B) of ERISA."  

The response was as follows inter alia:

        "When a pension plan receives an order requiring that all or a part of the benefits payable with respect to a participant be paid to an alternate payee, the plan administrator must determine that the judgment, decree or order is a “domestic relations order” within the meaning of section 206(d)(3)(B)(ii) of ERISA — i.e., that it relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child or other dependent of the participant and that it is made pursuant to State domestic relations law by a State authority with jurisdiction over such matters. Additionally, the plan administrator must determine that the order is qualified under the requirements of section 206(d)(3) of ERISA. It is the view of the Department that the plan administrator is not required by section 206(d)(3) or any other provision of Title I to review the correctness of a determination by a competent State authority pursuant to State domestic relations law that the parties are entitled to a judgment of divorce. See Advisory Opinion 92-17A (Aug. 21, 1992). Nevertheless, a plan administrator who has received a document purporting to be a domestic relations order must carry out his or her responsibilities under section 206(d)(3) in a manner consistent with the general fiduciary duties in part 4 of title I of ERISA."

        "For example, if the plan administrator has received evidence calling into question the validity of an order relating to marital property rights under State domestic relations law, the plan administrator is not free to ignore that information. Information indicating that an order was fraudulently obtained calls into question whether the order was issued pursuant to State domestic relations law, and therefore whether the order is a “domestic relations order” under section 206(d)(3)(C). When made aware of such evidence, the administrator must take reasonable steps to determine its credibility. If the administrator determines that the evidence is credible, the administrator must decide how best to resolve the question of the validity of the order without inappropriately spending plan assets or inappropriately involving the plan in the State domestic relations proceeding. The appropriate course of action will depend on the actual facts and circumstances of the particular case and may vary depending on the fiduciary’s exercise of discretion. However, in these circumstances, we note that appropriate action could include relaying the evidence of invalidity to the State court or agency that issued the order and informing the court or agency that its resolution of the matter may affect the administrator’s determination of whether the order is a QDRO under ERISA.5(5) The plan administrator’s ultimate treatment of the order could then be guided by the State court or agency’s response as to the validity of the order under State law. If, however, the administrator is unable to obtain a response from the court or agency within a reasonable time, the administrator may not independently determine that the order is not valid under State law and therefore is not a “domestic relations order” under section 206(d)(3)(C), but should rather proceed with the determination of whether the order is a QDRO." 

IT MIGHT BE A GOOD IDEA TO INVESTIGATE AND DETERMINE IF A MARITAL SETTLEMENT AGREEMENT WAS SIGNED BY THE PARTIES AND INCLUDED SURVIVOR BENEFITS, OR IF A JUDGMENT OF DIVORCE ADDRESSED TO SURVIVOR BENEFITS, OR WHETHER A QDRO SHOULD HAVE BEEN BUT WAS NEVER ENTERED, OR WHETHER THE QDRO WAS ENTERED BUT NEVER RECEIVED BY THE PLAN, OR WHETHER THE QDRO WAS RECEIVED BY THE PLAN BUT REJECTED.  KEEP IN MIND THAT THE PLAN ADMINISTRATOR HAS A FIDUCIARY RELATIONSHIP TO PROTECT THE PARTICIPANT AND THE ALTERNATE PAYEE.   
 

DAVID

20 hours ago, fmsinc said:

Please tell me if I understand you question.

"[IN AN ERISA QUALIFIED PLAN] Somehow a participant started [RETIRED AND ENTERED PAY STATUS] his pension on a QJSA without actually being married [AT THE TIME OF HIS RETIREMENT]- he was divorced prior to initiating his benefits and apparently just lied on the application? [LIED ABOUT WHAT?  ABOUT HAVING A FORMER SPOUSE ENTITLED TO SURVIVOR ANNUITY BENEFITS - HOW DO YOU KNOW THIS?] That participant has now died and the lack of marriage discovered. [BUT IN ORDER TO HAVE A SURVIVOR ANNUITY HE DID NOT NEED TO BE MARRIED AND HAVE A CURRENT SPOUSE, HE ONLY NEEDED TO BE MARRIED AND HAVE A FORMER SPOUSE - SO WHAT IS THE RELEVANCE OF THE "LACK OF MARRIAGE] No payments have been made to the would-be surviving spouse. [IF HE WAS DIVORCED PRIOR TO TO ENTERING PAY STATUS THERE MIGHT NOT BE A SURVIVING SPOUSE BUT THERE MIGHT BE A SURVIVING FORMER SPOUSE] Any thoughts about how the plan should correct for this, if at all?  The plan has not been made aware of any QDRO. It seems to me that the plan is just done now, and doesn't have any obligation to pay out the difference between what his SLA would have been and what the QJSA was.  [KEEP IN MIND THAT IF THERE WAS A MARITAL SETTLEMENT AGREEMENT OR A JUDGMENT OF DIVORCE AWARDING SURVIVOR BENEFITS TO HIS FORMER SPOUSE, THE PENSION PROTECTION ACT OF 2006 PERMITS THE ENTRY OF A POST-MORTEM/POSTHUMOUS QDRO SO THE MATTER REMAINS OPEN.]

 

Yes ERISA plan. Participant was not married at the time he retired. I understand that "surviving spouse" would include a former spouse under a QDRO, but no QDRO has been provided to the Plan nor has the Plan received any notice of any QDRO.  

Participant was divorced at the time he submitted his application, but said he was married. He did not provide any QDRO or court order, and one has still not been provided to the Plan. 

I am not aware of any legal precedent that requires a plan to hunt down a divorce order.  That is an obligation of the participant or AP.  The plan was not even aware of the participant's divorce until after the participant died. The duty ariseswhen a plan receives an order. 

22 hours ago, ebjmls21 said:

Curious as to how it was discovered that the participant was no longer married? Is it possible to look up the participant's divorce action to see whether or not any domestic relations order or marital support order was entered?  I think it is entirely possible that the participant thought electing a QJSA is what he was required to do because he and his former spouse agreed they'd split his benefit or at least that's what the former spouse's attorney will claim!

This occurred to me as well.  Participant's sister called plan after his death and said he was not married.  This situation would weight against paying him out the difference to the SLA. If the ex-spouse shows up with a QDRO entitling her to QJSA, the plan could possibly be on the hook for that. But as of now, no one has provided an order of any kind. 

I would definitely check out rocknrolls2's approach. If fraud was involved (which of course would need to be determined based on a careful examination of the facts), this seems like a very unique situation where arguably ordinary correction principles (which usually assume employer negligence) may not apply.