A recent court decision highlights the importance of up-to-date beneficiary designations for participants in non-qualified retirement plans. Without up-to-date designations, the payment of the benefits of a deceased participant in a non-qualified plan may be contested, which can result in additional expense for the plan sponsor or the participant, and may also result in the benefit not being paid in accordance with the deceased participant’s wishes. In this publication, we summarize steps that plan sponsors can take to mitigate the risks and costs related to beneficiary designations.
E & J Gallo Winery v. Rogers -
The decision bringing attention to beneficiary designations in non-qualified plans is E & J Gallo Winery v. Rogers. E & J Gallo Winery (“Gallo”) filed an interpleader action in a California federal court to determine the beneficiary under the Gallo Key Executive Profit Sharing Retirement Plan (the “ERP”) of Robert Rogers, a deceased participant in the ERP (the “Participant”). The Participant had designated his former spouse (the “Former Spouse”) as the primary beneficiary and his brother (the “Brother”) as the secondary beneficiary. Because the Former Spouse had waived her rights as the primary beneficiary, the district court found that the Brother was the proper beneficiary for the ERP benefit.
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