Kennedy v. Plan Administrator for DuPont Savings & Investment Plan

Background

William Kennedy participated in his employer’s savings and investment plan and had the power to name or replace a beneficiary. He named his then‑wife Liv as beneficiary. After their divorce a court decree said Liv was divested of marital rights to retirement benefits, but William never changed the beneficiary form. When William died, the plan administrator paid Liv. His daughter and executrix sued, arguing the divorce decree waived Liv’s rights; a District Court agreed but the Fifth Circuit reversed.

Reasoning

The Court addressed whether a waiver in a divorce decree is automatically void under ERISA’s rule that plan benefits cannot be assigned or alienated, and whether a plan administrator must follow plan documents. The Court said such a waiver is not necessarily an assignment or alienation under the statute. It relied on the ordinary meanings of “assign” and “alienate,” trust law about spendthrift beneficiaries who may disclaim interests, and the Treasury Department’s interpretation. But the Court held that ERISA requires administrators to act “in accordance with the documents and instruments” governing the plan. Because William’s beneficiary designation complied with the plan’s procedures and Liv’s claimed waiver did not, the administrator properly paid Liv.

Real world impact

The decision lets plan administrators rely on completed beneficiary forms and plan rules rather than digging into divorce decrees or varied external documents. It reduces the chance administrators will face routine disputes over non‑QDRO waivers (QDRO means qualified domestic relations order). The opinion also leaves open some questions about enforcement after benefits are paid and about waivers that strictly follow a plan’s own renunciation procedures.