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The Waiting Game Can be a Dangerous One

Dahl Aerospace Employees’ Ret. Plan of Aerospace Corp., 122 F. Supp. 3d 453 (E.D. Va. 2015)

Facts: A Virginia divorce decree, incorporating a settlement agreement, gave each spouse the option to elect survivor benefits under the retirement plan of the other. This provision was not immediately stated in a DRO or qualified by the plan.

The husband’s pension plan allowed him, upon retirement, to elect a 50%, 75%, or 100% survivor benefit.

The husband retired on July 31, 2014, 11 years after the divorce decree. He did not notify his former wife in advance, or give her any option to elect survivor benefits. Instead, he elected his current wife as 50% survivor beneficiary. He stated in his election that no outstanding court order required him to name another person as survivor beneficiary—a blatantly false statement.

Upon learning of the husband’s retirement, the former wife’s counsel prepared a draft DRO requiring the husband’s employer to act as if the husband had elected 100% survivor benefits for his former wife. The retirement plan refused to qualify this order, on the grounds that the husband had already elected a 50% benefit for his current wife and he was only permitted to name one survivor beneficiary.

The former wife sued the plan and the husband in federal court, seeking a declaratory judgment that the husband’s election of his current wife as survivor beneficiary was void for fraud, and that the plan was required to qualify an appropriate DRO naming the former wife as survivor beneficiary. The plan and the husband moved to dismiss the wife’s action.

Issue: Should the wife’s action be dismissed?

Answer to Issue: Yes.

Summary of Rationale: The plan argued that the wife lacked standing, because she was not an actual plan  But a person with a claim to benefits is also entitled to sue the plan. The former wife had a colorable claim to benefits.

At the time the husband retired, there was no QDRO in effect limiting his choice of survivor beneficiary. Therefore, the former wife could prevail only by establishing that the husband’s survivor benefit election was void. She cited no case law holding that an election of survivor benefits is void if a false statement is made which defrauds a former spouse who has not yet obtained a QDRO. In the absence of such law, the court refused to hold that the survivor benefit election was void.

Because the former wife did not obtain a QDRO, the husband’s election of his current wife was enforceable under ERISA, even though the election violated a state court order.


Orders dividing survivor benefits can be difficult to The fundamental problems are that most plans require election of survivor benefits at the time of retirement, and an order does not bind the plan until a QDRO is submitted. If the employee spouse retires before a QDRO is submitted, the plan is required to award the benefits in accordance with the election made upon retirement, and it cannot follow a contrary state court order. When retirement follows quickly after the divorce, before a QDRO can be submitted, there may be no way to enforce the order against the plan.

The only defense to this dilemma is to obtain a QDRO as quickly as It may be advisable for the alternate payee, in some cases, to insist that the QDRO be entered simultaneously with the divorce decree, and served immediately upon the plan.

The former wife in Dahl was defrauded, but she was also terribly negligent. By not having the survivor benefit order entered as a DRO and qualified by the plan during the 11-year time period between divorce and the husband’s retirement, she left herself wide open to exactly the sort of fraud which the husband committed. A spouse who waits 11 years to enter the pension division portions of a divorce decree as a QDRO is asking for trouble.

Despite the failure of the former wife’s federal lawsuit, she might still have a state law remedy. If the state court order directed the husband to elect the former wife as survivor beneficiary, and the husband named his current wife, that would seem to be a breach of the order, which would give the wife both a contract law remedy under the settlement agreement and a contempt remedy under the judgment. The former wife could not obtain an assignment of survivor benefits—which had vested in the current wife—but she might be able to obtain an award of damages, or perhaps an order to provide life insurance as a substitute benefit of equivalent size.

But it is far from clear that a state court action would succeed. The agreement and the decree gave the wife a right of election, but they do not appear to have created a mechanism for exercising this right. Was the husband required to give the wife advance notice of his retirement? Was the wife required to send the husband written notice of her election? A well-drafted agreement and decree should set forth the parties’ obligations. The agreement and decree in Dahl were silent. Again, the former wife was wronged, but she placed herself in a vulnerable position. A state court could construe the decree to require that the former wife make a positive election before the husband retired.

To repeat for emphasis: Don’t wait to get a QDRO until 11 years after the divorce decree is entered! If the court assigns pension benefits in your favor, get a QDRO as soon as possible after the decree is entered.