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Ruling Regarding Beneficiary Designation Via Telephone

The U.S. Court of Appeals for the 9th Circuit ruled that a participant could change his prior written beneficiary designation via telephone to the plan sponsor. The case involved a Xerox Corporation employee who participated in two Xerox retirement plans. He originally designated his wife as beneficiary for both plans. Upon his divorce, he wished to change the beneficiary to his son. He attempted to do so on three occasions through phone calls to Xerox. Xerox sent him beneficiary change forms each time, yet he failed to return the forms. At his death, both his son and ex-wife sought benefits under the Plans. The Xerox plan fiduciary sought assistance from the federal district court in the matter.

The initial ruling was in favor of the ex-wife on the basis that the beneficiary forms were plan documents. On appeal however, the 9th Circuit Court reversed the previous decision, as the beneficiary designation forms were not deemed to be governing plan documents as they did not contain information about the participant’s entitlements. Only
documents that could provide information about the participant’s status within the Plan could constitute governing plan documents. The Court also cited that the plan documents themselves contained no reference to the beneficiary forms.

However, the Xerox plan documents did require written designations for married participants but did not specify requirements for unmarried participants. The SPDs for both plans cited that participants could visit the website or call the Xerox Benefits Center to affect beneficiary designations. Based on the plan language, the court found that the Plan documents allowed only unmarried participants to change beneficiary designations via phone.

The result of this case points to a review of beneficiary designation procedures as outlined within plan documents and SPDs for clarity and specificity.; February 2, 2015.