Trust Sues Voya Over $1.4M Retirement Fund Payout

Pursuant to the Hendrix Trust, Dennis Hendrix was the trustee during his lifetime, and the Shelby County State Bank was named as successor trustee, according to the suit.

Hendrix named the Hendrix Trust as the sole primary beneficiary of his retirement plan account, valued at about $1.4 million.

OneAmerica Financial Partners was the record keeper for the plan under P&H's direction, a responsibility Voya took over when it acquired OneAmerica in January 2025, according to the suit.

Hendrix died in February 2024.

"Following his death, the Bank, as Trustee of the Hendrix Trust, and P&H, as Sponsor and Administrator of the Plan, sent Voya instructions to transfer the balance in the Hendrix Plan Account to an inherited IRA account for the benefit of the Hendrix Trust noting that, as a direct rollover, no deductions should be made from the proceeds of the Hendrix Plan Account for income tax withholding," the suit states.

The bank "provided supporting documentation to Voya including a copy of Mr. Hendrix's death certificate, a copy of the Hendrix Trust, and a beneficiary claim form directing that Mr. Hendrix's account in the Plan be rolled over via a trustee-to-trustee transfer to an inherited IRA in the name of Dennis Hendrix f/b/o the Trust," the suit states.

Rather than process the rollover, "and in direct contravention of the instructions," in November 2024 Voya issued a distribution check for the balance of the Hendrix Plan Account, less $144,234.73 in federal tax withholdings, to "James Schwerman as Trustee of Dennis D. Hendrix Living Trust Dated March 27, 2014," according to the suit.

"At no point prior to the issuance of the Distribution Check did Voya notify the Bank or P&H that it intended to disregard the rollover Instructions and issue the Distribution Check instead," the suit maintains.

When it issued the distribution check, Voya removed the assets of the Hendrix Plan Account from the plan "such that P&H as Plan Administrator no longer has access to the funds. Upon information and belief, the funds are being held by Voya," the suit states.

Since November 2024, "the funds in the Hendrix Plan Account have been uninvested due to Voya's wrongful issuance of the Distribution Check," the suit continues.

Voya, the lawsuit contends, "has exceeded the scope of its authority under the Plan Document and actively interfered with the administration of the Plan."

Voya "has repeatedly taken the position that the Hendrix Trust is not a 'designated beneficiary' because 'for a death benefit from a 401(k) account to be eligible to be rolled over, the beneficiary must be a designated beneficiary. A designated beneficiary is an individual (i.e. a human being),'" the lawsuit states.

However, according to the suit, Voya's argument relied on a "repealed version" of a Treasury regulation that predated the Secure and Secure 2.0 Acts.

"The current version of the regulation, published July 19, 2024, contains lengthy and explicit discussions of how a trust may be named as a beneficiary of a deceased employee's 401(k) plan account," the suit states.

Neither the prior nor current version of the regulation "contain any prohibition on rolling over the 401(k) account balance of a deceased employee to an inherited IRA account held by a trust named by the employee as the account beneficiary," according to the suit.

Voya said late Wednesday in a statement shared with ThinkAdvisor: "We've recently received the complaint and are reviewing it. As a matter of policy, we don't comment on ongoing litigation."

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