Takeaway: In this case, the employer's adherence to plan documents and its proactive approach in informing the employee of the deficiencies in her change-of-beneficiary form insulated it from liability. The employer recognized that the terms of the plan didn't give the administrator discretion to accept beneficiary designations that failed to comply with the form's instructions and acted accordingly in distributing plan benefits.
An employer did not breach its fiduciary duties in failing to remove a former spouse as beneficiary and distributing 401(k) benefits to him when the employee failed to properly change her beneficiary designation, the 8th U.S. Circuit Court of Appeals decided.
The employee originally designated her husband as the sole beneficiary of her 401(k) plan. When they divorced in 2002, the marital termination agreement (MTA) to which both parties agreed called for the employee to be awarded—free and clear of any claim on the part of her ex-husband—all of the parties' right, title and interest in and to the 401(k) Savings and Ownership Plan.
In 2008, the employee submitted a change-of-beneficiary form to her employer, attempting to allocate 33 1/3 percent of her 401(k) benefits to each of her siblings. However, the instructions specified that the allocation percentage must be whole percentages, so the employer did not change her designation. Despite the employer's attempts to notify the employee of the rejection—and sending her 11 subsequent annual...
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