Court: Missing 401(k) Beneficiary Info Doesn't Invalidate Form

October 20, 2006 (PLANSPONSOR.com) - Rejecting a lower court's finding that a 401(k) participant's beneficiary designation of his stepdaughter was not valid, a federal appellate court has sent the case back for further hearings.

In finding that the designation was valid, the 8 th  US Circuit Court of Appeals instructed the lower court judge in the USDistrict Court for the District of Minnesota to consider the participant’s mother’s claims that her son was incapacitated when he named the stepdaughter as a beneficiary.

Circuit Judge John Gibson, in writing for the appellate court, rejected claims by representatives of James Marier’s mother Rose that James Marier’s 2002 designation of adult stepdaughter Tracy Marks as beneficiary should not be followed.

The Rose Marier representatives had claimed that the beneficiary form wasn’t properly filled out (the line for describing the participant’s relationship with the beneficiary was left blank), that James Marier lacked the proper mental capacity when he completed the form and that he was affected by the stepdaughter’s undue influence.

The appellate court turned away the argument by Rose Marier’s representatives that the document designating Tracy Marks as beneficiary should be thrown out because they claimed James Marier had used correction fluid on the blank calling for the participant’s relationship to the beneficiary.

“Even if we could be certain that James used white-out in the blank provided for Tracy’s relationship to him, we could not conclude that it would be inconsistent with Plan terms for Alliant to give effect to the form,” Gibson wrote. “The Plan documents do not prohibit the use of white-out. …the Administrator’s determination that the relationship information on the change of beneficiary form functions only as an identification tool, and that failure to provide that information does not render the form ineffective where the Plan can otherwise identify the beneficiary, is wholly consistent with Plan terms.”

Gibson wrote that it was reasonable for the administrator of the Alliant Techsystems Inc. 401(k) Plan to determine that the missing relationship information on the participant’s beneficiary designation form was not a “material omission.”

The lower court judge had ruled that Marier’s mother was the proper beneficiary and the stepdaughter appealed.

The appellate ruling in Alliant Techsystems Inc. v. Marks, 8th Cir., No. 05-3614, 10/19/06, is  here ,

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