ERISA-Eighth Circuit Upholds Ruling That Antenuptial Agreement Did Not Waive Former Spouse’s Rights To Death Benefits Under A 401(k) Plan

In MidAmerican Pension and Employee Benefits Plans Administrative Committee v. Michael G. Cox, Sr., No. 12-3563 (8th Cir. 2013), the defendants were appealing from the district court’s grant of summary judgment against them. They argue that the district court erred in concluding that the antenuptial agreement between their son, Michael G. Cox, II (“Michael”), and his then-wife, Kathy L. Cox (“Kathy”), was ineffective to waive Kathy’s right to the funds in Michael’s 401(k) plan.

In this case, Michael and Kathy twice married and divorced between 1997 and 2004. On September 23, 2004, while unmarried, Michael designated his parents-the defendants here- as beneficiaries under his employer’s 401(k) plan (the “Plan”). Thereafter, Michael and Kathy decided to marry a third time. They executed an antenuptial agreement on February 19, 2010, before marrying on March 6, 2010. They reexecuted the same antenuptial agreement on March 26, 2010. The applicable part of the agreement stated that Kathy waives any rights she may have to Michael’s separate property, including benefits from any retirement plan. Michael filed a Petition for Dissolution of Marriage on May 4, 2011, but died on May 21, 2011 before the divorce was finalized. After Michael’s death, his parents and Kathy disputed who was to receive the funds in the Plan as a death benefit. Eventually, the dispute wound up in court.

In analyzing the case, the Eighth Circuit Court of Appeals (the “Court”) stated that ERISA governs the distribution of the Plan’s funds. The relevant statutory provision, § 1055 of ERISA, provides that a qualified preretirement survivor annuity (a “QPSA”) shall be provided to the surviving spouse of a vested plan participant who dies before the annuity starting date, unless the participant waived the QPSA. The question: did Michael validly waive the QPSA and appoint his parents as the beneficiaries of the funds? For Michael’s waiver to be valid, Kathy herself must have waived her rights to the QPSA in accordance with § 1055. Here, the Court concluded that Kathy did not provide any such waiver, since any waiver found in the antenuptial agreement failed to include an acknowlegment of the effect of the waiver, contrary to the requirements of § 1055 . As such, the Court ruled that Kathy was entitled to the Plan’s funds as the surviving spouse, and it affirmed the district court’s decision.

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