Failure To Establish Clear Beneficiary Designation Procedures Forces Retirement Plans Into Avoidable Litigation

A recent Ninth Circuit decision, Becker v. Williams, 2015 WL 348872 (9^th Cir. 2015), highlights the pitfalls of maintaining ambiguous plan rules governing beneficiary designations. Plan sponsors who want to avoid disputes should include clear procedures in their plan documents and SPDs for designating and changing a death beneficiary.

A Cautionary Tale for Plan Sponsors and Administrators

A long-term Xerox employee participated in two company retirement plans. In 2002, he designated his then-wife as his beneficiary. Following his divorce in 2006, the participant "telephonically undesignated" his ex-wife and identified his son from a prior marriage as his new beneficiary. In January of 2011, he gave similar directions during another telephone conversation. After each call, the participant was sent beneficiary change forms. On at least one occasion, the forms were returned to the participant for signature. Moreover, Xerox confirmed in writing that the participant's