This issue should be of central concern to the attorney representing a potential alternate payee under a QDRO. A QDRO is not a QDRO until a certified executed copy is received and approved by the Plan Administrator. If the participant dies before a certified copy of the QDRO has been reviewed and approved by the [...]
Does the distribution of a portion of the plan participant’s benefits under a plan constitute a garnishment of such participant’s wages as defined under federal or state law?mojo455312020-04-19T06:48:04+00:00
No. According to §206(d)(3)(M) of ERISA, benefit payments made to alternate payees under the terms of a QDRO do not constitute a garnishment for purposes of §303(a) of the Consumer Credit Protection Act.
The answer is yes. It is important to remember when drafting a QDRO that an alternate payee is essentially treated under ERISA with all of the rights and privileges of a plan beneficiary.
Do the reporting and disclosure provisions of ERISA and the Code apply to alternate payees receiving plan benefits under a QDRO?mojo455312020-04-19T06:47:06+00:00
Yes, because an alternate payee has all the rights and privileges of a beneficiary under the plan, the payee should receive summary plan descriptions, summary annual reports, and an explanation of ERISA rights as appropriate.
Can a QDRO provide that all of the participant’s accrued benefits are to be paid to the alternate payee?mojo455312020-04-19T06:46:42+00:00
Yes. It is a common misconception that an alternate payee is only entitled to half of the participant's vested accrued benefit under the plan. If a state domestic relations court decides that the alternate payee is entitled to 100 percent of the participant's pension benefits, the plan administrator will be obligated to follow the order [...]
How should a plan administrator handle a domestic relations order that was submitted before the effective date of the provisions relating to QDROs under the Retirement Equity Act of 1984?mojo455312020-04-19T06:46:21+00:00
According to the legislative history, a plan administrator may choose to treat a domestic relations order that was issued on or before December 31, 1984 (the effective date of the QDRO rules) as if it were a QDRO even though the order does not satisfy all of the IRC §414(p) requirements for qualification. However, the [...]
No. The Omnibus Budget Reconciliation Act of 1989 (OBRA 1989) subsection 7841 (a)(2) added a new subsection 11 to §414(p) of the IRC regarding the application of QDROs to governmental and church plans.
Not necessarily. Welfare benefit plans as described in ERISA §3(1), which include an employer's medical, dental, and disability plans, typically have been exempt from the provisions relating to QDROs, which are contained in Part 2 of Title 1 of ERISA. However, employer provided life insurance can be divided by QDRO. We recommend contacting a qualified [...]
When will the Plan Administrator begin to segregate an separately account for the alternate payee’s share of the benefits?mojo455312020-04-19T06:44:41+00:00
Pursuant to section 414(p)(7) of the Internal Revenue Code, during any period in which the issue of whether an executed domestic relations order is a qualified domestic relations order is being determined, the Plan Administrator shall withhold and separately account for the amounts which would have been payable to the alternate payee during such period [...]
Can a QDRO provide the alternate payee with a portion of the participant’s “future” benefits under the Plan ?mojo455312020-04-19T06:44:20+00:00
No. The QDRO must include an effective date of assignment that is on or before the date that such QDRO is submitted to the Plan Administrator. This requirement is necessary due to loan and withdrawal provisions. Therefore a QDRO submitted on June 1, 1996, cannot include language that provides the alternate payee with, say 50%, [...]