Antenuptial agreement did not waive spouse’s right to QPSA

An antenuptial agreement requiring the future waiver of a pre-retirement survivor annuity did not sufficiently inform a spouse of the effect of the waiver to satisfy ERISA, according to the U.S. Court of Appeals in St. Louis (CA-8). Absent acknowledgement of the effect of the waiver, the spouse remained entitled to the 401(k) benefits of her former husband.

Incident to their third marriage to each other, a 401(k) plan participant and his spouse executed an antenuptial agreement. The agreement expressed the intent of the parties to waive their interest in the property (including retirement benefits) of the other in the event of the termination of the marriage by either death or operation of law. With respect to benefits to which a party could be entitled under a plan that requires joint and survivor annuities, pre-retirement survivor annuities, or similar benefits, the agreement obligated the non-participant spouse to specifically agree to consent in writing to any election by the participant to waive any and all forms of survivor benefits, including, but not limited to, any pre-retirement survivor annuity and joint and survivor retirement annuity waivers and beneficiary designations. The non-participant spouse would be required to complete such consent to any waiver of these benefits at any time as requested by the participant, whether currently or at any time in the future. In addition, the agreement required the wife to specifically agree to properly execute a waiver with respect to the husband’s retirement plan upon the husband’s request following the marriage of the parties.

The antenuptial agreement was executed on March 26, 2010. On May 4, 2011, the husband filed a Petition for Dissolution of Marriage. Before the divorce could be finalized, however, the husband, on May 21, 2011 died. Subsequently the participant’s parents (who had been designated beneficiaries of the participant’s 401(k) funds in the intervening period between his second and third marriages) requested that the wife, in accordance with the antenuptial agreement, sign a waiver of her rights to the plan benefits. The wife refused to sign the waiver, forcing the plan to file an interpleader action for a determination of the proper recipient of the funds. A federal trial court awarded the participant’s benefits to the former spouse, ruling that the antenuptial agreement did not allow for sufficient acknowledgment by the spouse of the effect of the waiver to constitute a waiver of her rights.

Waiver of pre-retirement survivor annuity

The dispute on appeal was whether the participant’s spouse, by signing the antenuptial agreement, waived her right to the participant’s 401(k) benefits in accord with the conditions of ERISA §205(c)(2)(A), which require that the consent acknowledge the effect of the waiver election. The appeals court initially determined that, because the agreement contemplated the future execution of waiver or consent to a change in beneficiary, the agreement did not in itself constitute a sufficient waiver. Absent the fulfillment of the promise to execute the waiver, the court continued, the wife could not have meaningfully acknowledged the effect of any waiver of her spousal rights.

In addition, the court noted that the antenuptial agreement failed to inform the wife in clear and express terms that she had both a spousal right to receive the funds in the participant’s 401(k) plan and that she was waiving that right. In order to constitute a valid waiver, the court stressed, the agreement would need to have clearly informed the wife that by executing the waiver she would not receive the funds to which she would be otherwise entitled under the plan. As the waiver was inadequate, the wife was entitled to the participant’s benefits.

Source: MidAmerican Pension and Employee Benefits Plans Administrative Committee v. Cox (CA-8).

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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