Posthumous QDRO Valid, Court Rules

January 3, 2005 ( - A federal court has ruled that a qualified domestic relations order (QDRO) entered after a 401(k) plan participant's death is valid and must be enforced.

>Chief  US District Judge William Sessions III of the US District Court for the District of Vermont has ruled that the posthumous QDRO is valid, even though it was entered after the death of former IBM employee Gregory Price.

>The suit had been brought by two of Price’s children who contended that his ex-wife, Lucille Freeman Price, should not receive half the payout from Price’s 401(k) plan.

>Gregory Price worked for IBM from 1977 until February, 2002, and had participated in the company’s 401(k) retirement plan. He was married in the late 1980’s and was divorced in January, 2003. In the divorce decree, Lucille Price was given half of her ex-husband’s 401(k) assets. As was IBMs policy, the parties submitted proposed QDROs, with Lucille Price submitting hers to the company on January 16.

>Gregory Price died February 5, 2003, before the QDRO had been presented for approval in divorce court. In September of that year, Lucille Price asked the court to issue a nunc pro tunc (“now for then”) order, which would make the QDRO legal and give her half of the benefits issued from the retirement plan. The order was given in December of last year; however, IBM did not pay have the benefits to Lucille Price because of the children’s suit. IBM instead filed an interpleader action in federal court in order to determine the rightful beneficiary.

>In a partial summary judgment, Sessions ruled that a posthumous QDRO under the Employee Retirement Income Security Act (ERISA) was valid because, among other things, it  had all the required details. Sessions also ruled that the QDRO was valid because ERISA allows for an alternate payee up to 18 months after benefits become payable to gain a QDRO.

>The issue remains as to the exact amount of benefits to be paid to Lucille Price, with the court recommending that she and IBM should meet and attempt to reach a deal. Her request for attorney’s fees was denied.  

>The ruling in IBM Savings Plan v. Price is available  here .