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Compliance March 2, 2003
Court: Settlement Order is a QDRO
February 3, 2003 (PLANSPONSOR.com) - A federal
appeals court has ruled that a 1983 state court divorce
settlement naming a General Electric employee's daughters as
beneficiaries qualifies as a QDRO and, therefore, pre-empts
ERISA.
Reported by Fred Schneyer
The US 2 nd Circuit Court of Appeals ruled that even though the 1983 divorce settlement predated The Retirement Equity Act of 1984 (REA), which added the concept of the QDRO to ERISA, the 1983 agreement is still valid as a domestic relations order, according to a Financial Times report. Because of that, the daughters are the beneficiaries, the court decided.
According to the Financial Times, Michael Bigelow participated in three ERISA plans sponsored by GE: a life insurance plan administered by Metropolitan Life and two retirement plans. In late 1982, Bigelow and his wife were divorced, and in early 1983, they reached a settlement agreement.
The settlement agreement identified, though it did not name, the plans, and it designated “the children of this marriage” as irrevocable beneficiaries of “any retirement benefits . . . attached to this GE program.” The settlement agreement was incorporated into a state court order and judgment on February 1, 1983.
Despite the settlement agreement, Bigelow in 1991 designated his father as his beneficiary under the GE benefit plans. After Bigelow’s death in 1999, both his daughters and his father submitted benefit claims.
Having concluded that they could not determine which claimant should receive the plan benefits, Metropolitan Life and GE entered the suit naming both the father and the daughters as defendants. When the District Court ruled that the daughters were the proper beneficiaries, the father appealed. Not surprisingly, Bigelow’s father argued that the settlement order was not a QDRO because it did not (a) name each plan to which it applied or (b) give the names and addresses of the plan participant.