Pension Death Benefits - Death of Beneficiary

Pension plan unmarried participant elects life annuity with 10 years certain and names three children as beneficiaries for one-third each. Participant dies before the 10-year guarantee period ends so remaining payments are due to the beneficiaries. However, one of the three beneficiaries also died, shortly after the participant but before receiving any benefits if that matters.

Are remaining benefits now paid to the two surviving beneficiaries at 50% each, or does the deceased beneficiary's portion go to that person's estate?

The plan is silent, as are the SPD and benefit election/beneficiary designation forms. Nothing specifically allows for beneficiaries to also elect their own beneficiaries so I'm inclined to say split remaining guaranteed payments between two remaining children. Thoughts?

Do you think it different if beneficiary had started receiving payments and then died?

Unless there is a specific legal avenue we must pursue (reason for my question) I think we ultimately need to have Plan Administrator interpret and decide upon how proceed.

Thanks

Can we assume nothing in the plan, or any other documents, includes (or maybe implies) "per stirpes"?

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 Nothing specifically allows for beneficiaries to also elect their own beneficiaries...

IMHO, the plan does not need to state that this; it should be self-evident that beneficiaries of a "certain and life" payment form are entitled to name their own beneficiary.  The plan does not care who, since it has promised to pay X number of payments.

CuseFan, I’m with you; if the plan is ERISA-governed and the plan’s governing documents state the administrator’s discretionary power to interpret the plan, the administrator may use that discretion.

Consider whether the plan’s administrator or claims administrator should, preferably before deciding, write a memo to explain the legal reasoning for its interpretation. Courts defer to reasoning, but not to an absence of reasoning.

If there is a claimant beyond the remaining named beneficiaries, be punctilious about following ERISA § 503 and the plan’s claims procedure.

This is not advice to anyone.

You have a lapsed beneficiary of a pension plan, presumable ERISA qualified. 

The options in an ERISA qualified plan are: (i) there would be an Order of precedence in the Plan documents that will award the decedent's share to his wife, children, parents, siblings, estate, etc; or, (ii) the beneficiary designation form will condition receipt of his share by saying "if he survives the settlor, and if he doesn't survive the settlor, then the decedent's share passes to the other members of the class to which he was a member, that is the other two children in this case; or, (iii) the share of the deceased beneficiary reverts back to the Plan. 

In my experience, absolute silence on the subject is rare.  

If the annuity is ERISA qualified, and if ERISA does not address the situation, or if the annuity is not ERISA qualified, then state law will apply (and state law will not/cannot be preempted by ERISA).

See my attached Memo re: terminable interests.  

But see Boggs v. Boggs - at https://supreme.justia.com/cases/federal/us/520/833/#tab-opinion-1960143

where the Supreme Court held that ERISA preempts state community-property law allowing a non-participant spouse to transfer by a testamentary instrument an interest in undistributed pension plan benefits.  That would seem to strip the deceased party in the CuseFan example, and his heirs and next of kin would have no claim to the lapsed 1/3rd share, and the deceased party's share would pass to the other two children. 

Buy on the other hand we have FERS and OPM and 5 CFR 838.237(b)(3) and the attached Memo demonstrating how another Federal Law deals with this situation. 

And here is how TSP handles a deceased beneficiary - https://www.tsp.gov/for-beneficiaries/determining-beneficiaries/  Not the comment: "A will, prenuptial agreement, separation agreement, property settlement agreement, or court order will not override either a beneficiary designation or the order of precedence."

At the end of the day it is difficult to understand how the Plan passed muster without addressing this matter.  

David

TERMINABLE INTEREST DEFINED BENEFIT PLANS REV'D 03-16-24.pdf OWNERSHIP INTEREST 5 CFR 838.237(b)(3).pdf

I essentially agree with Peter but with a twist.  It seems that the plan administrator/fiduciary would make a decision as to the "beneficiaries" under the terms of the Plan, and memorialize its reasoning. I have seen where, though ERISA preempts state law, the plan would apply state law where a beneficiary has predeceased the participant and the plan does not have any controlling provisions.  That is, what would state law require if a will named the 3 children as beneficiaries and 1 predeceased the testator without any  other designations (e.g., per stirpes or per capita)?  The ability to do this fell under the committee's interpretive discretion (that the plan provided for).   

The plan would then provide this decision to the parties, including anyone who might be a contesting party.  The plan should provide all of the parties (including any contesting parties) with the plan's claims procedures and let the parties know that if anyone disagrees with the decision they can pursue the claim through the plan’s administrative claims procedures. After a decision is rendered on any contesting appeal by the plan fiduciary, if one or more of the contesting parties want to appeal the decision further, then the plan can file an interpleader action.  Be careful in the way the interpleader is styled because my recollection is that one way may be more difficult than another (I think you want to interplead the parties and not the funds, but you should consult a litigator on which method may be better given your circumstances.  Although, if the funds are interpleaded, the court likely will dismiss the plan from the case).  The interpleader may be the way to go especially if there are significant funds at issue.

If interpleaded, the court would then determine the entitlement of the competing claimants. Because the administrative process would have been exhausted, a court could apply the deferential abuse of discretion standard of review to the plan's decision. This could allow a quicker resolution if the parties see that the court likely will defer to the plan's decision or simply because there is a possibility of an interpleader.  Note that a settlement can be entered into between the competing claimants that may be different from what the plan determined.  If the plan agrees to the settlement, it needs to make sure it gets a release from all the competing claimants.

Hopefully, your plan says how these expenses are handled but if the funds are interpleaded, I think the costs should come from the funds (confirm).

Just my thoughts so DO NOT take my ramblings as advice....

What Artie M describes likely, depending on the governing documents’ provisions, could fit within my explanation.

An administrator might look to a State’s law, the Uniform Probate Code or another uniform or model law the Uniform Law Commission recommends, or common law as an aid in interpreting the plan.

Thank you everyone for your valuable input. Would be nice if everything was always black and white but having this forum to navigate the gray areas is invaluable. Have a great weekend!

How can I locate my deceased mother's coverage plan employee of Marlboro Phsicriratric Hospital 

I was incarcerated when my mother passed away and I was her Beneficiary however one of her sisters stole the insurance check that was sent to my mother's and grandmother's house,my grandmother was holding the insurance check for me until I was released from prison however she also passed away and my mother's sister took the check out of her hospital draw now insist on telling me that my mother didn't have any type of insurance coverage and that's infactualy a lie for she was a employee for the Government and State for 20 years at Marlboro Phsicriratric Hospital in Marlboro Township in Marlboro,New Jersey she even had stocks and bonds in it and she personally told me that me,my little sister and our children would be very well compensated if anything was to ever happen to her and I am the number one beneficiary.

Now I'm home and Marlboro Phsicriratric Hospital is no longer open however it's still stands on its grounds and I don't know whom to contact nor how about her insurance policy that I inherited from her job for I never once asked the name of the insurance that covered her or Marlboro Phsicriratric Hospital Employees 

Can you please assist me in this very serious matter? 

Thank you so very much 

Ms. Darris Paige Mitcham 

darrispmitcham143@gmail.com 

712 Crown Street Apt C22 Brooklyn, New York 

11213 

(973) 573-4340

It sounds like you will need to contact an attorney to help with your situation.