LeBoeuf v. Entergy Corp., 2025 WL 1262414 (5th Cir. 2025)
Available at https://www.ca5.uscourts.gov/opinions/unpub/24/24-30583.0.pdf
Following a 401(k) plan participant’s death, his adult children challenged the plan’s distribution of his $3 million benefit to his wife. The participant had designated the children as beneficiaries after his first wife’s death, but several years later, he remarried. The beneficiary designation form stated that designations would be automatically revoked upon a subsequent marriage, making the new spouse the beneficiary absent submission of an updated form reflecting the spouse’s waiver of beneficiary rights (as required under ERISA and the Code). The rule that marriage voids a previous beneficiary designation was set forth in the formal plan document as well as multiple summary plan descriptions (SPDs) provided to the participant over the years. The quarterly account statements sent by the plan’s trustee, however, continued to list the children as beneficiaries and did not mention the spousal beneficiary provision. The children asserted that the employer/plan sponsor, the plan’s benefits committee, and the trustee breached their ERISA fiduciary duties by failing to adequately inform the participant of the spousal beneficiary and waiver requirements. After the trial court dismissed the claims against the employer and trustee and ruled that the committee had complied with its fiduciary duty, the children appealed.
The appellate court upheld the trial court’s ruling. Because the plan document named the committee as the plan administrator, the fiduciary status of the employer and trustee depended on their authority and actions regarding the specific function at issue—participant communication. According to the court, the committee, not the employer, was responsible for participant communications, and the trustee’s duties in producing and sending quarterly statements were ministerial in nature. Establishing fiduciary breach by the committee would require showing that it made material misrepresentations or failed to provide adequate information. The court explained that participants have a duty to inform themselves of plan provisions, and while fiduciaries must respond to inquiries “promptly and adequately in a way that is not misleading,” they have no duty to determine whether confusion exists absent any inquiry. Because the plan document, SPDs, and beneficiary designation form all clearly described the spousal beneficiary policy and automatic revocation of pre-marriage beneficiary designations, the children could not “hang their hat” on the one set of informal documents (the statements) that did not reiterate the rule.
EBIA Comment: The committee was able to show that it satisfied its fiduciary responsibility through consistent communication of key plan terms in the plan document, SPDs, and beneficiary designation form. Nevertheless, there was room for improvement, as the quarterly statements indicating that the children remained beneficiaries apparently led to confusion. Updating recordkeeping systems so that quarterly statements reflect automatic beneficiary revocations or include a disclaimer about spousal rights could help reduce litigation risk in similar situations. For more information, see EBIA’s 401(k) Plans manual at Sections XIII.G (“Spousal Consent Requirements”), XXIV.B (“Who Is an ERISA Fiduciary?”), XXIV.E (“ERISA Fiduciary Duties”), and XXXVII.H (“Claims for Breach of Fiduciary Duty”).
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