Are Posthumous QDROs Allowed When the Participant Remarries?

Among the most complex issues involved in divorce cases is the distribution of retirement benefits through the entry of Qualified Domestic Relations Orders (QDROs). Retirement plans that are governed by the Employee Retirement Income Security Act (ERISA) must be divided by QDROs, and alternate payees of such plans can be spouses, ex-spouses, or dependents of the plan participant.

When the participant dies before retirement, their surviving spouse is often the recipient of their retirement benefits. However, distributing funds in these circumstances can quickly become a challenge if there are multiple parties with claims to the funds and there is no QDRO in place.

Griffin v. Griffin

Consider the case of Griffin v. Griffin, which was appealed to the Virginia Supreme Court, and involved the issue of whether retirement benefits are vested upon the entry of a divorce decree or the death of the plan participant.

David Griffin and Sandra Griffin were married in March 1987 and had two children. They divorced in 1996, and their separation agreement was incorporated into the divorce decree. As part of the separation agreement, David and Sandra were to name their children the co-beneficiaries of all 401(k)s and other such plans that would be distributed upon death.

The Husband Remarries

At the time of his death, David was employed by Dominion Virginia Power and qualified for Dominion’s Salaried Savings Plan, which was a defined contribution plan governed by ERISA. David had named his children as beneficiaries of this plan in 2002. However, after marrying Kimberly Cowser-Griffin in 2008, he named her the beneficiary of most retirement funds and changed his children to contingent beneficiaries. He passed away in 2012 while Kimberly was still named beneficiary.

The plan’s terms provided for a lump sum payment to the surviving spouse unless the spouse agrees to another beneficiary or a QDRO has been entered. Because neither of those conditions were met at the time of David’s death, Sandra sought a posthumous QDRO to award their children the plan benefits. Posthumous QDROs are allowed in certain scenarios, and nothing explicitly prevents such qualified orders from being entered.

How the Vesting of Benefit Rights Impacts Posthumous QDROs

According to ERISA, rights are vested upon the death or retirement of the participant. Even though federal law preempts state law, the appellate court stated that QDROs are administrative mechanisms to enforce rights that are awarded based on state law, such as through divorce decrees. Since Virginia law says property rights vest when incorporated into a final divorce decree, the children in this case maintained their rights to their late father’s retirement funds.

The circuit court initially denied Sandra’s request for entry of a QDRO, and the Virginia Court of Appeals reversed that decision. The Supreme Court of Virginia affirmed the appellate court’s ruling and directed the circuit court to enter Sandra’s proposed QDRO to have the plan’s benefits awarded to her and David’s children.