Compliance April 28, 2006

Participant's Parents to get 401(k) Proceeds

April 28, 2006 (PLANSPONSOR.com) - In light of a 401(k) plan provision that automatically withdrew beneficiary designations upon a participant's remarriage, the participant's parents, not his ex-wife, should get his retirement savings proceeds, a judge ruled.
Reported by

US District Judge Joseph Hood of the US District Court for the Eastern District of Kentucky turned away the request by ex-wife Cindy Vanhoose to be awarded her former husband’s plan balance through the plan offered by his employer, NiSource Inc.

Rather, Hood said the evidence showed the participant, Samuel Dudley, remarried after divorcing her, which triggered the plan provision revoking her designation as a beneficiary.

When Samuel Dudley died, his father, Ambrose Dudley, went into court seeking a judge’s ruling about how should get the 401(k) money. Vanhoose filed legal documents saying she was the proper recipient and Ambrose Dudley said his son’s estate should receive the funds.

Hood rejected Vanhoose’s argument that Hood should consider what she said was a 2001 conversation she had with her ex-husband who she claimed told her that he never filed a new beneficiary designation.

Under the plan and in the absence of a valid designation, the benefits should go to Samuel Dudley’s parents, because there was no evidence that he had a surviving spouse or children, Hood said.

  

The case is Dudley v. NiSource Corporate Services Co., E.D. Ky., No. 5:05-217-JMH, 4/18/06.

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