ERISA is a federal statutory system that governs most corporate retirement plans. At the heart of the operation of an ERISA- governed plan is the concept of the “plan documents.” In a case of first impression, a Federal Court of Appeals holds that beneficiary designation forms are not plan documents, thereby directing the plan administrator to potentially disregard a signed beneficiary designation form in favor of an ex-wife, allowing for the possibility that a telephonic attempt to change the beneficiary to the decedent’s son could control.
There is no requirement under the Employee Retirement Income Security Act (“ERISA”) as to whom may be designated as a beneficiary, except that if the plan participant is married spousal consent is required for someone to designate an individual other than his or her spouse. A designation, however, must be made in conformity with the requirements of the “plan documents” in order to be deemed a beneficiary. Caples v. U.S. Foodservice, Inc, et al., 444 Fed. Appx. 49 (5th Cir. 2011).
An ERISA fiduciary must distribute benefits “in accordance with the documents and instruments governing the plan.” 29 U.S.C. § 1104(a)(1)(D). Until recently, few courts have addressed whether beneficiary designation forms are “plan documents” under ERISA. As a case of first impression the United States Court of Appeals for the Ninth Circuit in Becker v. Williams, held that beneficiary designation forms were not “plan documents” governing the administrator’s award of benefits under 29 U.S.C. § 1104(a)(1)(D). Becker v. Williams, 777 F.3d 1035, 1038-39 (9th Cir. 2015). Previously, in Kennedy v. Plan Administrator for Dupont Savings and Investment Plan, 555 U.S. 285 (2009), the Supreme Court declined to decide whether the category of “documents and instruments governing the plan” described in § 1104(a)(1)(D) included beneficiary designation forms.
In Becker, a retiree of the Xerox Corporation, as well as an ERISA plan participant, designated his wife as his beneficiary. Simple enough until the two divorced some time later. Following the participant’s divorce, he designated his son as his beneficiary. This designation was made telephonically. The participant did not sign and return beneficiary designation forms. In holding that beneficiary designation forms were not “plan documents” for the purpose of ERISA distributions, the Ninth Circuit remanded the action for a determination whether, and pursuant to state law, the participant strictly or substantially complied with the governing plan documents’ requirements for making the beneficiary designation change. Based on the limited materials for the Ninth Circuit’s review, including only “excerpts” of certain summary plan descriptions (or “SPD”) and other documents, the Court held that the remand required a factual inquiry as to whether the participant-decedent substantially complied with the terms of the retirement plans.
The Ninth Circuit drew guidance from the interpretation of another ERISA provision, 29 U.S.C. § 1024(b)(4), which requires plan administrators, upon the request of a participant or beneficiary, to provide the requesting party with a copy of various plan documents, including: SPDs, annual reports, terminal reports, bargaining agreements, trust agreements, contracts, and “other instruments under which the plan is established or operated.” Following this same method of interpretation, the Supreme Court in Kennedy suggested that the “other instruments” category described in § 1024(b)(4) overlaps with the “documents and instruments governing the plan” category in § 1104(a)(1)(D). 555 U.S. at 304. To that end, the Supreme Court has specifically excluded the statutorily mandated summary plan description, listed in § 1024(b)(4), as a source of the plan’s governing terms. See Cigna Corp v Amara, 131 S. Ct. 1866, 1878 (2011) (“[T]he summary documents, important as they are, provide communication with beneficiaries about the plan, but . . . their statements do not themselves constitute the terms.”)
I had been under the impression that the beneficiary form would always control the disposition of the death benefits of an ERISA plan, but the court here seems to leave the door open to the possibility that substantial, but incomplete, compliance with the plan rules to change beneficiary designations might be sufficient to overcome a previously signed beneficiary designation.