In the case of MidAmerican Pension and Employee Benefits Plan Administrative Committee v. Michael G. Cox, Sr. et al, the 8th U.S. Circuit Court of Appeals decided that the U.S. District Court for the Southern District of Iowa had erred in its ruling that the parents of the plan participant were the rightful beneficiaries of his 401(k) retirement account. Instead, the appeals court determined that the participant’s wife was entitled to these benefits.
Language in the antenuptial agreement said the wife would “waive and release any and all rights…with respect to separate property” and listed the participant’s retirement plan account as part of his assets. The participant’s parents were listed as the beneficiaries to this account.
After the participant died, both the wife and the parents approached the plan administrator about collecting the benefits. The plan administrator asked the wife to sign a formal waiver, so the parents could collect the benefits. The wife refused and the plan sought judgment from the district court as to who was the true beneficiary.
The appeals court acknowledged that the agreement contained several provisions regarding retirement accounts, including sections that “contemplate the future execution of a waiver or consent to change in beneficiary.” However, they ruled that the very inclusion of such language in the agreement “suggests that [the wife] did not waive her spousal rights in the antenuptial agreement…were the agreement itself a sufficient waiver.”
The court also said the agreement failed to inform the wife "in clear and express terms" that she had a right to receive her husband's retirement benefits and was waiving this right.
The court referred to Lasche v. George W. Lasche Basic Profit Sharing Plan, which said "any waiver of retirement benefits by a spouse must strictly comply with the consent requirements set forth in ERISA [the Employee Retirement Income Security Act]." The court said that given ERISA's strict compliance requirements, "we conclude that the agreement did not contain an acknowledgment by [the wife] sufficient to satisfy ERISA Section 1055(c)(2)(A)(iii)." As such, the wife was found to be the rightful beneficiary.
Michael G. Cox, II, and Kathy L. Cox were married in March 2010. Both before and after the wedding, they signed the agreement and their signatures were notarized. As previously mentioned, the agreement contained language to exclude Kathy Cox from claiming her husband's retirement benefits. He had previously listed his parents, Michael G. Cox, Sr., and Jolene Cox, as the beneficiaries in 2004.
Michael Cox filed for divorce in May 2011, but died before it was finalized. After his death, both his wife and parents requested the benefits.
The full text of the decision can be found here.