Finally, citing Ablamis and Boggs, the Court reasoned that permitting a deceased former spouse to devise an interest in a living participant's pension benefits would violate the statutory purpose of providing a stream of income to the participant and his or her beneficiaries in their retirement years. The Court of Appeal of California, Fourth District relied upon similar reasoning in In re the Marriage of Shelstead, 66 Cal.App.4th 893, 78 Cal.Rptr.2d 365 (1998). In that case, the California appellate court held that an order granting an alternate payee and "her designated successor in interest" the right to monthly payments under a pension plan until the participant's death could not be qualified under the REA and ERISA, because it would require the plan to "pay benefits to an individual ([the alternate payee's] successor) who is not an `alternate payee' within the meaning of ERISA."
The court reasoned that issuing a QDRO required a qualified recipient (beneficiary or alternate payee) entitled to some of the rights in the 401k pursuant to ERISA (29 U.S.C. sections 1056 (d)(3) and (d)(3)(K)), and that under ERISA, the term “former spouse” does not include a “deceased spouse.” The court relied on In re Marriage of Shelstead (1998) 66 Cal.App.4th 893, 904, Branco v. UFCW (9th Cir. 2002) 279 F.3d 1154, 1158, and Ablamis v. Roper (9th Cir. 1991) 937 F.2d 1450, 1456 (Ablamis). The court found the death of the non-participant spouse divests that spouse of the title of spouse or other dependent, rendering such spouse an unqualified participant under ERISA.
To qualify for preferential tax treatment under the federal tax code, employer pension, profit-sharing and stock bonus plans including those established under 26 United States Code section 401(k) (so-called "401(k) plans") are required by law to prohibit the assignment or alienation of an employee's interest in the plan. (In re Marriage of Shelstead (1998) 66 Cal.App.4th 893, 899 (Shelstead); 26 U.S.C. § 401(a)(13)(A), (B);Bartlett Co-op. Ass'n v. Patton (Kan. 1986) 722 P.2d 551, 555 ["Federal law specifically requires that tax-qualified employee pensions, profit-sharing, and stock bonus plans contain an anti-alienation clause," citing 26 U.S.C. § 401(a)(13)].
” Id. at 846 . This Court's reading of the Boggs opinion does not support the proposition that [appellee] would be unable to pass her interest in the pension plans to a third-party of her choosing. 10. [Appellant] also relies on a case decided by the state appellate court in California, In re Marriage of Shelstead, 66 Cal.App.4th 893 (1998). While the court in Shelstead invalidated a devise to a third-party that was made in a QDRO, the court made the following statement: “We stress the narrowness of our decision.
Originally there was a question whether the preemption prohibited the treatment of pension benefits as community property. (See In re Marriage of Shelstead (1998) 66 Cal.App.4th 893, 899.) The question arose out of ERISA's general ban on the ability of plan participants to assign or alienate their benefits under the plan.
This difference in the procedural posture of the cases is critical, and fatal, to the Regents' reliance on San Diego Firefighters. Likewise, the Regents' citations to In re Marriage of Shelstead (1998) 66 Cal.App.4th 893, Doe v. Wilson (1997) 57 Cal.App.4th 296, and Gates v. Municipal Court (1992) 9 Cal.App.4th 45 are inapposite. In Shelstead, this court considered the issue of whether certain retirement benefits awarded to the employee's spouse in a divorce proceeding were preempted by federal law.
A transfer of plan benefits is ineffective unless the order satisfies ERISA’s QDRO criteria. (In re Marriage of Shelstead (1998) 66 Cal.App.4th 893, 899.) A domestic relations order that grants marital property rights to a spouse of a participant in a plan (an “alternate payee”) is qualified only if it meets criteria not at issue in this case and also specifies “the amount or percentage of the participant’s benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined.”
We reject this contention. As explained in In re Marriage of Shelstead (1998) 66 Cal.App.4th 893, 898-899, the anti-assignment provision controls the allocation of pension benefits upon the dissolution of marriage: "Congress included the [anti-assignment] provision to protect employees and their dependents from the participant's financial improvidence and to ensure benefits were available upon retirement. [Citation.] [¶] Shortly after ERISA's enactment, courts began grappling with the question whether the transfer of pension benefits incident to a divorce was a prohibited assignment or alienation. . . . [¶] Seeking to address this and other issues, Congress enacted an amendment to ERISA . . . [¶] . . . Congress took a two-step approach. First, it declared the transfers of pension benefits between spouses in a divorce context were prohibited alienations within the meaning of the [anti-assignment] provision.
” QDRO stands for Qualified Domestic Relations Order. A QDRO is required anytime payments are to be made to an “alternate-payee” under a qualified retirement benefit plan. (26 U.S.C. § 414(p)(1)(A) & (8); 29 U.S.C. § 1056(d) (3)(B) & (K); see In re Marriage of Shelstead (1998) 66 Cal.App.4th 893, 902.) In July 2001, the parties jointly approved and filed an “Order Dividing [OCERS] Benefits.”
’ [Citation.] [¶] These amendments provide that a domestic relations order that attempts to transfer pension benefits away from the employee is specifically barred by the spendthrift clause unless the order satisfies the QDRO criteria. [Citations.] As one commentator explains, ‘[b]y stating explicitly that divorce divisions of pension plans are [alienations], Congress has foreclosed community ownership of the right to receive benefits by non-participant spouses unless that right is transferred to the spouse by a QDRO.’ [Citation.]” (In re Marriage of Shelstead (1998) 66 Cal.App.4th 893, 899-900, fn. omitted.) On or about November 7, 2005, Steiner sent a proposed stipulated judgment to Yomtov.