New Rules on Retirement Benefits

U.S. Supreme Court Rules On Ex-Spouse’s Waiver Of Retirement Benefits

In Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, 129 S. Ct. 865 (2009), the Supreme Court considered whether the Employment Retirement and Income Security Act’s (ERISA) Qualified Domestic Relations Order (QDRO) provision is the only method by which a divorcing spouse may waive his or her right to receive an ex-spouse’s pension benefits.

William Kennedy, an employee at DuPont, designated his then-spouse as the sole beneficiary of his pension and retirement savings plan. The couple subsequently divorced and, as a part of the divorce decree, his wife agreed to forfeit “all right, title, interest, and claim” to Kennedy’s plan assets. The divorce court approved a QDRO to disburse Kennedy’s assets held outside of the savings plan, as well as some additional assets that were not in dispute. The divorce decree was never submitted to the pension plan, however, and Kennedy never replaced his ex-wife as the plan’s sole beneficiary. After he died, his assets from the plan were distributed to his ex-wife pursuant to her designation as sole beneficiary. Kennedy’s daughter, as executrix of his estate, claimed that the ex-wife waived her rights to the plan assets pursuant to the QDRO and the district court granted summary judgment for the estate.

The Fifth Circuit held that because the QDRO had not been submitted to the pension plan, the ex-wife did not give up her interest in the plan assets. The Supreme Court affirmed the ruling of the Fifth Circuit, holding that the plan administrator properly distributed the plan assets to the ex-wife. Although the Court held that the waiver executed by the ex-wife did not violate the anti-alienation provisions of ERISA, the Court reiterated that the terms of the plan governed the distribution of Kennedy’s assets under the plan. Because the plan expressly required a QDRO for a spouse to waive his or her right to benefits and a QDRO was never entered in this case, it was proper for the administrator to distribute the assets to the ex-wife.