Seventh Circuit Reinstates Ex-Spouse as Beneficiary After Failed Attempt to Update ERISA Plan

In Packaging Corp. of Am. Thrift Plan for Hourly Emps. v. Langdon, No. 25-1859, —F.4th—-. 2026 WL 262954 (7th Cir. Feb. 2, 2026), the Seventh Circuit reversed a district court’s sua sponte summary judgment ruling and held that a plan participant did not effectively remove his ex-spouse as the primary beneficiary of an ERISA-governed retirement plan where he failed to comply—substantially or otherwise—with the plan’s prescribed beneficiary-change procedures.

The participant had designated his then-wife as the primary beneficiary of his employer’s retirement plan, with his sister named as a contingent beneficiary. Following the couple’s divorce, the participant directed that a fax be sent to the plan’s benefits center requesting removal of his former spouse “as a beneficiary” from several benefit programs, including the retirement plan. Although the employer removed the former spouse from certain health-related benefits and updated her designation in the retirement plan records from “spouse” to “ex-spouse,” she remained listed as the primary beneficiary when the participant died several months later.

Faced with competing claims from the former spouse and the participant’s estate, the plan initiated an interpleader action and deposited the disputed funds with the court. While cross-motions for summary judgment were pending, the district court determined that the participant’s sister (the contingent beneficiary) also had a potential interest, joined her estate as a necessary party, and then granted summary judgment in favor of the sister’s estate based on the federal common law doctrine of substantial compliance.

On appeal, the Seventh Circuit reviewed the substantial compliance issue de novo and reversed. Applying its two-part test—(1) intent to change the beneficiary and (2) “positive action” that is, for all practical purposes, similar to the action required by the plan—the court found the first element satisfied but the second lacking. The fax was an unequivocal expression of intent, but it did not constitute a sufficient attempt to effectuate the change because it materially deviated from the plan’s stated procedures, which directed participants to contact the benefits center or update beneficiary designations online.

The court distinguished prior Seventh Circuit cases finding substantial compliance where participants used the plan’s required change mechanism but made clerical errors or omissions (such as failing to sign a form). Here, by contrast, the participant did not attempt to follow the plan’s prescribed process at all. The court also noted that the fax itself suggested the participant understood additional steps might be required, as it requested that the plan send “any necessary paperwork” to complete the change—yet no follow-up occurred.

Because the participant did not substantially comply with the plan’s beneficiary-change requirements, the Seventh Circuit held that the former spouse remained the valid primary beneficiary at the time of death. The court reversed and remanded for entry of judgment in the former spouse’s favor.