Retirement Benefits Adjustment Upheld by Court: Key Insights
Retirement Plan Administrator Rightfully Adjusts Former Employee’s Benefit Payments, Court Rules
January 21, 2026 – Raleigh, NC
The 4th U.S. Circuit Court of Appeals has recently upheld the adjustment of monthly annuity payments by a retirement plan administrator, aligning with the regulatory compliance requirements of a "qualified joint survivor annuity". This ruling affirms the prior district court’s judgment, setting a significant precedent in the industry regarding regulatory compliance and benefit distribution agreements.
In 2010, David Gasper was involved in a divorce where his retirement plan—an asset provided by employer EIDP Inc.—was declared a marital asset. A domestic relations order (DRO) crafted during the divorce mandated that Gasper would receive a lifetime annuity, while his former spouse would receive a reduced payment during his lifetime. The DRO specifically allowed for adjustments to the former spouse's benefit to cover the cost of the joint survivor annuity, a stipulation aligning with regulatory requirements.
By 2013, EIDP's plan sponsor confirmed that benefits would be distributed per the DRO's regulations. However, upon eligibility for retirement benefits six years later, Gasper contested the determined $3,400 annuity figure, claiming it should be $3,785.26, in line with a Qualified Domestic Relations Order (QDRO). This discrepancy led to Gasper's ERISA lawsuit against EIDP and the plan administrator, citing wrongful denial of benefits.
Appellate Court's Ruling and Contract Interpretation
The appellate court, in reviewing the case, upheld that de novo interpretation is appropriate when assessing a QDRO, viewing it as a contract subject to standard contract interpretation principles. This diverges from the usual industry-standard abuse of discretion applied to plan provisions and highlights the importance of precise contract language in regulatory compliance and risk management.
The court ruled the QDRO language was clear, permitting the recalibration of the alternate payee's benefit, aligning with state law and the plan terms. Additionally, the court dismissed Gasper’s claim for statutory penalties regarding delayed document provision under ERISA, noting the plan fulfilled verbal and written requests timely, with no demonstrated prejudice incurred by Gasper.
Judges DeAndrea Gist Benjamin and Nicole G. Berner concurred with Judge Barbara Milano Keenan’s opinion. Legal representatives from both parties declined to comment, leaving the industry to draw insights from this pivotal regulatory and compliance ruling.