Kennedy v. Plan Administrator for DuPont Savings & Investment Plan
The Supreme Court ruled that a retirement plan administrator was right to pay a deceased worker's 401(k)-style savings plan benefits to his ex-wife, even though she had given up her rights to those benefits in their divorce decree, because he never filled out the paperwork removing her as the named beneficiary.
The unanimous decision means that pension and savings plan administrators can rely on the beneficiary forms on file rather than digging through divorce papers or other outside documents to figure out who should really get the money, giving employers a simple, predictable rule to follow.
How it got here: A federal trial court ordered the plan to pay the estate; the Fifth Circuit reversed, ruling Liv's waiver was an unlawful transfer; the estate asked the Supreme Court to review.
The Case in Depth
What happened
William Kennedy named his wife Liv as the beneficiary of his employer savings plan. They later divorced, and the divorce decree said Liv gave up her rights to his retirement benefits, but William never filled out a new form removing her as beneficiary. When William died, his daughter, acting as executor of his estate, argued the plan money should go to the estate instead of Liv, since Liv had waived her claim.
The question before the Court
When a divorced wife gave up her rights to her ex-husband's retirement plan money in the divorce papers, but he never removed her as the named beneficiary, who should get the money when he died?
The Court's answer
Partly — the ex-wife's waiver in the divorce decree was not automatically void under the pension law's ban on transferring away benefits, because she never tried to redirect her interest to anyone else; the Court rejected the lower court's broader reading of that ban. But that didn't end the matter.
The Court then held that the plan administrator still had to pay the ex-wife anyway, because federal pension law requires administrators to follow the plan's own beneficiary paperwork rather than outside documents like divorce decrees. Since the husband never updated the plan's beneficiary form after the divorce, the ex-wife remained the official beneficiary and was entitled to the money, even though she had waived her claim in the divorce itself.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Millions of people hold retirement accounts through employer plans covered by the federal pension law ERISA. This ruling tells plan administrators they can safely pay benefits to whoever is listed on the official beneficiary form, and tells divorcing spouses and their lawyers that giving up rights in a divorce decree is not enough — the account holder must also update the beneficiary paperwork with the plan itself.
What changes now
This is a final merits decision, so there is no remand for further factfinding. The Fifth Circuit's judgment in favor of paying Liv is affirmed, though the Supreme Court reached that result through different reasoning. The Court left open questions about whether the estate could separately sue Liv directly to recover the money after it was paid to her, since that issue was not before it.
What this does not decide
The Court did not decide whether the estate could sue Liv directly in a separate lawsuit to recover the money after it was paid to her, nor did it address cases where a beneficiary murders the plan participant, or where a plan's documents provide no way at all to give up an interest.
How the Court got there
The legal reasoning, step by step
- The Court first asked whether Liv's waiver counted as an 'assignment' or 'alienation' of her benefits, terms in the pension law that traditionally mean directing an interest to someone else; the Court found Liv never directed her interest to anyone, so her waiver didn't fit those terms.
- Looking to the law of trusts that historically informs pension law, the Court noted that a trust beneficiary has always been allowed to simply refuse or disclaim an interest without that refusal counting as a forbidden transfer, so long as the beneficiary doesn't try to redirect the money to someone specific.
- The Court gave weight to the Treasury Department's own reading of its regulation, which said a waiver only counts as a barred transfer if the beneficiary tries to steer the money to another named person — deferring to the agency's reasonable interpretation of its own rule.
- Having concluded the antialienation rule didn't void Liv's waiver outright, the Court turned to a separate question: whether the plan administrator still had to honor that waiver when deciding who to pay.
- The Court held that the pension law requires administrators to follow the plan's own paperwork rather than outside documents like divorce decrees, because a simple, document-based rule lets employers process claims quickly without getting pulled into lawsuits over the meaning of side agreements.
- Applying that rule here, because William never used the plan's own process to remove Liv or name a new beneficiary, the plan administrator was legally required to pay Liv, regardless of what the divorce decree said.
Doctrinal impact
Cases affected by this decision
Reaffirms Boggs v. Boggs (520 U. S. 833)
Relied on to show federal pension law overrides conflicting state-law rules about who gets plan benefits.
Reaffirms Egelhoff v. Egelhoff (532 U. S. 141)
Cited as support for requiring administrators to pay according to plan documents, not outside rules.