The Employee Retirement Income Security Act of 1974 (“ERISA”) obligates plan administrators to manage covered plans in accordance with the “documents and instruments” governing them. It also requires covered pension benefit plans “provide that benefits . . . may not be assigned or alienated” (“the anti-alienation provision”); but exempts qualified domestic relations orders (“QDROs”) from the bar on assignment or alienation.
In Kennedy, Executrix of the Estate of Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, et al. (2009), the issue to be determined was whether a federal common law waiver in a divorce decree (not a QDRO) of the designated beneficiary’s interest in the plan was rendered void by the anti-alienation provision.
The Supreme Court of the United States held that while a federal common law waiver of her right to take a beneficial interest in the plan in their divorce decree divested decedent William Kennedy’s former wife, Liv Kennedy, of her designation as William’s savings and investment plan beneficiary at the time of his death, William had failed to execute any document removing Liz as the savings and investment plan beneficiary. Therefore, the plan administrator correctly paid Liv rather than William’s estate in accordance with the “documents and instruments” governing the plan.