Q&A WITH TEAH CORLEY: Court decision could play role in how benefits are distributed

Court decision could play role

Q: How will the Supreme Court’s recent ruling in Kennedy v. DuPont affect plan sponsors and administrators?

A: This ruling has been well-received by plan sponsors and administrators. The court’s decision favors putting the burden on the participant to ensure that they provide appropriate documentation to the plan sponsor or administrator — and supports plan sponsors and administrators in recognizing that they can only act on the documentation they have been provided. The ruling more clearly confirms that plan sponsors and administrators can rely solely upon the terms of a plan document and the forms they receive versus having to look to outside documents for guidance before confirming who is eligible to receive a retirement plan distribution. In this case, the ex-spouse agreed to waive her rights to her ex-husband’s benefits, but a qualified domestic order (QDRO) was never completed or submitted and the beneficiary documentation was never updated to remove the ex-wife as beneficiary. The plan sponsor had no choice but to issue the distribution to the ex-wife as the named beneficiary on file. Any other decision would have put a significant burden on plan sponsors and administrators.

Q: What is a qualified domestic order and why is it important?

A: A qualified domestic relation order creates or recognizes the existence of an alternate payee’s right to receive (or assigns to an alternate payee the right to receive) all or a portion of the benefits payable with respect to a participant under a pension plan.

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