ComplianceJanuary 29, 2010

Court Allows Beneficiary Switch for Annuity Contracts

A federal judge in Pennsylvania has ruled that a participant in TIAA-CREF annuity contracts met the requirements to change his beneficiary from his ex-wife to his long-time friend.

Reported by Fred Schneyer

U.S. District Judge Stewart Dalzell of the U.S. District Court for the Eastern District of Pennsylvania found that participant John L. Turner had “substantially” complied with TIAA-CREF’s requirements for a beneficiary designation change from ex-wife Pamela Turner to a friend, Thomas Bernardo. Turner, a physician and a professor at several Philadelphia-area universities, lived with Bernardo for 27 years before Turner’s death, according to the court.

Dalzell ruled that Turner had adequately communicated his wishes about his beneficiary to TIAA-CREF including twice sending the investment company written notice of his intention to make the change.

The court also ruled that Turner had substantially complied with TIAA-CREF requirements under New York and Pennsylvania state law, asserting that substantial compliance was the proper standard to determine the beneficiary of a benefit plan under the Employee Retirement Income Security Act (ERISA).

TIAA-CREF asked the court to determine the proper beneficiary of the five annuity contracts Turner owned when he died in 2008. Both Bernardo and Pamela Turner claimed they were the proper recipient.

The case is Teachers Insurance and Annuity Association of America v. Bernardo, E.D. Pa., No. 09-911, 1/26/10.