Retirement Accounts and Pension Benefits in Interpleader

Two very different kinds of account

ERISA plans: the plan documents rule

The Supreme Court held in Kennedy that a plan administrator properly paid the beneficiary named under the plan documents, even though she had waived her interest in a divorce decree.¹ In Egelhoff, it held that ERISA preempts a state statute that would revoke a former spouse’s designation for ERISA plans.² In Boggs, it held that “ERISA pre-empts” a state community property law that would have let a deceased first wife pass to her sons an interest in her husband’s undistributed pension benefits.³

Together, these cases mean the plan pays according to its documents, and state law that tries to redirect benefits away from the plan’s beneficiary is often preempted. A post-payment suit against the recipient may still be possible in some circuits. See divorce.

Spousal rights in employer plans

Many pension plans, and some other plans, must provide a survivor annuity to a participant’s spouse. A participant may elect to waive it, but under the statute that election “shall not take effect unless” the spouse “consents in writing,” the consent acknowledges the effect of the election, and it “is witnessed by a plan representative or a notary public,” subject to limited exceptions.⁴

That is why a beneficiary form naming someone other than the spouse may not control in these plans. Disputes over whether a valid consent was given are a recurring reason plans hold payment or interplead.

Whether there is a spouse at all can be the question. In a Colorado complaint, a 401(k) plan alleged that a participant named his three children on a 2015 beneficiary form and indicated on it that he was not married. He died the next year. A woman listed on the death certificate as his surviving spouse claimed the account and argued that the non-spouse designation was invalid. Two of the children claimed under the form and gave the plan a state-court order of legal separation between the participant and the woman, entered about three months before the form was signed.⁵ complaint (PDF)

The plan document itself can be the problem. Trustees of a Texas profit-sharing plan alleged that the plan had long been run as though the joint and survivor annuity rules applied. As the trustees described those rules, half of a married participant’s account funds a death benefit for the spouse unless the spouse waives it, and the participant may name anyone for the other half. But when the plan was amended and restated in 2006, “a box was inadvertently not selected to apply the QJSA rules,” a fact “only recently uncovered in 2025.” Shortly before his death, a participant named his two daughters for the half he could designate, in an account the trustees believed held about $3 million. His wife was not asked to consent. If the rules do not apply, the trustees said, “there may be an argument” that the wife takes the whole account. One daughter indicated she would contest the late change and wanted her mother to receive everything. The trustees asked to tender the funds and have the court decide.⁶ complaint (PDF)

Divorce orders: QDROs

ERISA generally prohibits assigning plan benefits, but it allows payment under a qualified domestic relations order. A QDRO is a court judgment, decree, or order, including approval of a property settlement, that relates to child support, alimony, or marital property rights and “creates or recognizes the existence of an alternate payee’s right” to receive all or part of a participant’s benefits, and that meets the statute’s content requirements.⁷ An order that does not qualify generally does not bind the plan.

When plans interplead

Plans usually decide claims under their own procedures, with notice of a denial generally due within 90 days, extendable once.⁸ When two people claim the same benefit and the answer depends on facts the plan cannot resolve, such as a disputed signature or competing court orders, the administrator may interplead. In Andochick, for example, the 401(k) plan administrator affirmed its decision to pay the named former spouse, while the life insurance plan administrator “found that it was unable to make a determination and stated its intention to file an interpleader.”⁹

IRAs

An IRA is held under an agreement between the owner and a bank, brokerage, or other custodian, and its beneficiary designation is generally governed by that agreement and state law. State rules on divorce revocation, slayer statutes, and similar issues can therefore apply. Federal tax rules still govern how quickly an inherited IRA must be distributed, which can affect what each claimant ultimately receives.

IRA paperwork can still involve a spouse. In a California complaint, an investment firm alleged that when an owner opened an IRA in 1999, naming her husband as primary beneficiary and her daughters as contingent beneficiaries, the husband signed a written consent to her designating someone other than himself as primary beneficiary. In 2016 she named the two daughters as primary beneficiaries of that IRA and of a Roth IRA, and in 2017 she named them as TOD beneficiaries of a brokerage account. After her death in 2018, the husband told the firm he had tried, before she died, to revoke his consent, and he claimed all three accounts. The daughters claimed half of each account under the forms on file. The firm also named the estate in case any designation failed.¹⁰ complaint (PDF)

The custodial agreement also usually says who takes if no valid designation is on file, often the surviving spouse and then the estate. In one brokerage IRA case, the firm alleged that it had rejected a change form naming the owner’s relatives because it was an outdated version, that the owner never resubmitted it, and that the agreement’s default therefore pointed to the surviving spouse; the relatives claimed under the rejected form. The court required the firm to deposit the accounts rather than post a nominal bond. See Raymond James v. Ellison.

Related

• Divorce and beneficiary designations
• Federal programs, including the Thrift Savings Plan
• Annuities

Footnotes

1. Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009). ↩

2. Egelhoff v. Egelhoff, 532 U.S. 141 (2001). ↩

3. Boggs v. Boggs, 520 U.S. 833 (1997). Cornell LII. ↩

4. 29 U.S.C. § 1055(c)(2)(A). Cornell LII. ↩

5. Complaint for Interpleader ¶¶ 15–26, Infor (US), Inc. v. Young, No. 1:16-cv-03151 (D. Colo. filed Dec. 21, 2016), ECF No. 1. Allegations only. ↩

6. Declaratory Judgment Action and Interpleader ¶¶ 9–14, Catalani v. Catalani, No. 5:25-cv-01585 (W.D. Tex. filed Nov. 26, 2025), ECF No. 1 (filed by the plan’s trustees and plan administrator). Allegations only. ↩

7. 29 U.S.C. § 1056(d)(3)(B). Cornell LII. ↩

8. 29 C.F.R. § 2560.503-1(f)(1). eCFR. ↩

9. Andochick v. Byrd, 709 F.3d 296 (4th Cir. 2013). ↩

10. Complaint in Interpleader ¶¶ 2–21, USAA Investment Management Co. v. Hodges, No. 1:18-cv-00605 (E.D. Cal. filed May 1, 2018), ECF No. 1. Allegations only. ↩