Inherited IRA
Help!!!
After the death of my ex-husband in 2007, I inherited his Profit Sharing Fund (IRA) from a major corporation as the sole beneficiary. My children are now suing me for possession of this “Fund” saying that I am not entitled to it because, within my divorce settlement, both ex-husband and I waived our rights to insurance polices, retirement plans, etc.
However, the Major corporation that had employed my ex-husband, after having reviewed the divorce settlement agreement from 1991, determined that I was entitled because they felt that the divorce settlement agreement dealt with “at the time of divorce” but did not deal with the future or at the time of death.
I believe that Erisa Laws are what govern retirement funds. Can that be helpful for me? Who should be the legal owner of this Inherited IRA? Any and all advice will be greatly appreciated!!!!!!!!!!!!!!
Permalink Submitted by mk foss on Sun, 2010-10-10 00:23
There have been some Supreme court cases on this issue. ERISA pre-empts state laws but whether it pre-empts your divorce decree or not isn’t clear. Have your attorney look at Egelhoff v. Egelhoff a 2001 Supreme Court case or Kennedy v. Plan Administrator for DuPont a 2009 case.
Permalink Submitted by Alan Spross on Sun, 2010-10-10 01:15
Could you please clarify whether the account was a qualified employer plan or an IRA? Despite your reference to IRA, it sound like this was not an IRA at all. Also, was your ex remarried at the time of his death?
Permalink Submitted by J Burke on Sun, 2010-10-10 13:49
Thank you for responding. The Inherited “fund” was in a profit sharing plan with his employerand became an Inherited Ira when it was transferred to me. How might those points affect current ownership?
No, my ex-husband had never re-married.
I , in advance, appreciate any and all information that you can offer. Thank you!!!!!!!!!
Permalink Submitted by Alan Spross on Mon, 2010-10-11 03:00
The fact that he never remarried is key because an employer plan beneficiary is deemed to be the current spouse unless that spouse signs a waiver. Since there was no current spouse, that issue does not apply. I also doubt whether ERISA applies here either since an ERISA plan benefit can be awarded pursuant to a divorce settlement, so we are back to the question of how the settlement was worded. I think that the plan administrator was correct in allowing you to do the IRA rollover for the reasons you cited unless the agreement was clear about where the death benefits of the plan should go, but I have not looked at the cases Mary Kay referenced in her prior post. Those cases therefore might be material to this situation.
Permalink Submitted by J Burke on Mon, 2010-10-11 04:40
Thank you for your response. You mentioned that how my divorce settlement agreement was worded…that this might be important. My divorce settlement agreement only talks about what was agreed upon at the time of divorce. It never mentions what should happen to my ex-husbands profit sharing plan in the future or at his death. Neither is there any mention of his profit sharing plan in his will.
Does any of this information seem helpful?