I see dozens of QDRO each year to settle marital property divisions. I have never seen one to pay child support, although it should be possible under the QDRO regs. Why not? Is there a legal impediment?

While permissible under the QDRO rules, the employee has to pay the income tax on the child's benefits under the assignment of interest rule.

MJB -

Have you or the others seen a QDRO used to meet obligations for child support from a DC plan against the account of a participant not otherwise in pay status?

I recently had a hardship request from an employee who said that garnishments for current and back child support had reduced his paycheck to an unsurvivable amount. I mentioned that he might be able to work with an attorney or friend-of-the-court to have a QDRO drafted against his plan assets to bring his support current -- but nothing came of it.

As often as I hear about the difficulty custodial parents and state agency have in collecting back child support and the number of garnishments to friend-of-the-court agencies our employees have, it seems like I would get a QDRO once in a while. Do you think it's just ignorance on the part of those responsible for collecting support money?

- Beth

For whatever it is worth, I have handled and approved a small number of QDROs attaching the PS accounts of participants not in pay status for child support. All were issued by domestic relations section of the local courts (operating as the state collection and disbursement unit). The plans involved all provided for distributions under a QDRO before the earliest retirement age.

Along the lines of this thread,how long can a PA restrict a Payees account to allow the AP to have their DRO amended in order to qualify? I'm working with someone whose account has been restricted since 2005 and the PA won't release it without an order from the court. Thoughts?

http://www.dol.gov/ebsa/Publications/qdros.html
See (for example) Q&As 2-10 to 2-12 and cross references in the footnotes.

mrstexas:

Because you are dealing with Fidelity and typically Fidelity does not know the law and does not care to follow the law, I am not going to offer a detailed suggestion. If you cannot get state court orders to say exactly what the 900 pound goriila wants, you may have to resort to forcing the 18 month period to run on a requirement for disposition following a decision on qualification of an order. Unfortunately, the way to make the 18 months run is to trigger a distribution, but most people don't understand that. Once you tirgger a distribution, I don't know if you can stop it. But maybe you can bull your way to forcing Fidelity to release restrictions based on the 18 month rule and the determination that the orginal order was not qualified. You should also see if you can enlist support from the Department of Labor. Unfortunately, the DOL has its own problems with understanding the law and has some blinding biases that are not favorable to your quest.

If QDROphile is correct that it's Fidelity in question, and if they are being reluctant to remove a hold that should otherwise have expired, then you're best immediate course of action is via the plan sponsor... ie, the company's benefits department. Provide a clear and polite written summary of the facts and law to the plan sponsor and request that they remove or instruct Fidelity to remove the account hold. In areas of ambiguity where they are otherwise reluctant to take action, Fidelity will nearly always defer to written instruction from a client. If the company tries to simply forward your letter to Fidelity then politely escalate w/in the company's benefits/HR structure.

Thank you. The 18 month period has well expired. The parties decided not to amend the DRO in order to qualify but Fidelity left the restriction and won't remove it.

Some plan fiduciary is responsible for QDRO administration, and may be the culprit unless FIdleity is refusing to follow instructions of the fiduciary. I think Fidleity has a service option that allows total outsourcing of QDRO administration, and that outsourcing should include appointment of a special fiduciary -- I don't know the relationship of the fiduciary to Fidelity. Masteff is correct that you need to get to the fiduciary who is responsible, otherwise Fidelity just hides behind its mechanical policies. No matter what the Fidelity policies, the appropriate fiduciary can instruct Fidelity to call off account restrictions. the plan sponsor is not necessarily the fiduciary, but it can identify the fiduciary.

Thanks for putting it in better words QDROphile... yep, I know someone who's basically outsourced the whole shootin' match to Fidelity, but the plan sponsor still has 2-3 people in-house w/ enough brains to address problems. One key thing a plan sponsor has is a backdoor into Fidelity leading directly to an dedicated customer service manager whose job it is to sort out this type of mess.