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QDROs, Anti-alienation and non-ERISA plans...


Guest STLGiant
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Guest STLGiant

It's my understanding that school districts, as quasi-government entities, are exempt from ERISA Title I, but not from Title II.

It is also my understanding that in order for ANY 403(B) annuity contract, or 403(B)(7) custodial account to be a "valid" contract, it must contain ERISA's anti-alienation language.

Finally, it's my understanding that when Congress passed the Retirement Equity Act of 1984, establishing QDROs, the intent was to provide an exception to the anti-alienation provisions of both ERISA and the Code, since the antialienation provision and ERISA's broad preemption provisions conflicted with state laws designed to ensure that individuals satisfy their family support obligations.

So help me with this logic. If the only Code Sections that a district 403(B) plan must adhere to is anti-alienation...

AND

if the concept of QDRO is an exception to anti-alienation

THEN

I can't see how school district 403(B) plans exempt from QDROs?

Second question, if the answer is that the district must adhere to REA QDROs, due to the anti-alienation exception, what else under REA must non-Title I plans adhere to?

I can think of spousal consent on beneficiary designations or loan consent as additional inclusions, since without it, what would stop one spouse from naming a non-spouse beneficiary (let's assume it's not the kids or a trust) or taking a maximum loan from the plan prior to filing for divorce?

Replies welcomed...

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Start by examining your premises. A valid 403(B) arrangement does not have to comply with ERISA if it is a governmental plan and governmental plans are exempt from section 401(a) (13 ) of the Internal Revenue Code. Section 414 (p) has special provisions for governmental plans. Domestic relations orders could get really interesting under governmental plans, but probably most plans and state laws roughly approximate the federal scheme for QDROs.

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Guest STLGiant

Thanks QDRO, although I understand what you are saying, it still appears as clear as mud. Tell me, is the valid contract/custodial account rules determined by anti-alienation or by transferability.

If it's the former, then I still don't understand. If it's the latter, then perhaps it's very clear.

BTW, do you know of a source or chart that lists what states have adopted special rules for DROs (i.e. they haven't adopted ERISA QDRO rules) in the event the plan is not subject to Title I?

Thanks!

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I don't really understand what you mean by the valid contract/custodial account rules. An arrangement is valid if it meets applicable requirements. The requirements are different for governmental plans compared to private employer plans. You can find other threads that discuss whether or not a governmental plan document should include ERISA features or references. You can also find a thread about whether or not a 403(B) plan has to offer annuity options -- answer: it depends. For a 403(B) plan, you start with the requirements of 403(B).

Also, a plan can have features beyond what is required as long as it does not provide what is forbidden. Unless an employer wants a totally custom arrangement, the employer will be limited to what someone else has designed for sale. In these products, you tend to have some common elements, dictated by marketing rather than perfect fit with the buyer. Some products can be made to fit better than others.

As for state law, I am not aware of a list. I would not expect to find one. I am aware of at least one state that has a special statute on domestic relations orders applicable to certain governmental plans. But the same state has its rules for domestic relations orders on a major government plan incorporated into the statute that constitutes the plan. This sort of variability makes analysis and organization of rules very difficult.

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Guest STLGiant

I appreciate your response.

My understanding of the audit requirements is that while there is no requirements that all 403(B) plans operate in accordance with its terms (as there is no written plan document requirement for many) there is certain Code requirements which MUST be in either the annuity contract or custodail account agreements, whether or not the plan sponsor is subject to ERISA. My understanding is that the annuity contract or custodial account must provide three items so to be "valid", as follows:

1) Non-transferability requirement under 401(g)

2) Direct Rollover Requirements under 1.403(B)-2, Q&A 4; and

3) IRC 402(g) limit under 401(a)(30).

If any of these items are missing, the contract is not adequate for a 403(B) non-ERISA, non-Title I plan (or any other 403(B) arrangement for that matter, I think,)

2) and 3) I understand. 1) is hazy to me. How does non-transferability relate to distributions under a DRO?

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STLGiant, there are actually more requirements for even a non-ERISA 403(B) plan than the ones you mention. (The Code section 415 limit and the age 70½ distribution requirement spring to mind.) However, to focus specifically on your question, the non-transferability requirement is theoretically an issue because it could be interpreted to prohibit transferring a contract (or a portion of one) to a former spouse, for example. However, given that ERISA-covered 403(B) plans are required to comply with qualified domestic relations orders, the transferability requirement obviously could not prohibit compliance with such orders. The issue then becomes how far that exception extends.

I think that most people would assume that a non-ERISA plan could comply with any domestic relations order, not merely with one that would be a qualified domestic relations order under ERISA. (See section 414(p) for comparable rules for qualified plans that are not covered by ERISA.) But what about an order that is not a domestic relations order? For example, suppose that a Vermont court issues an order in favor of a former party to a civil union. Unless the party is a "dependent," such an order would not even be a domestic relations order, much less a qualified domestic relations order, under section 414(p). Can a 403(B) plan nevertheless comply with it?

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The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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Guest STLGiant

Dear Carol:

Thanks for your input. I concur that 415 and 70.5 distributions are also mandated, yet you open the door for a previous post of mine, if 70.5 is minimum distributions are required, who has the onus on the 204(h) notifications? If the accounts are rolled over, it's the custodian, no issues there. But, what if the accounts are maintained by the participant? Remember, they were set up as a plan of the district, since without the district, one cannot set-up the 403(B) arrangement. Ergo, the onus must fall on the district to notify of a 70.5 distribution if the account is not rolled over to an IRA at separation of service, how could it not be?

Unfortunately, you and I both know that a vendor is not going to provide 70.5 notice on a timely basis, jeez, they seek to keep the assets, not see them leave their coffers! I've seen situations where the vendor never notified the ex-participant, even though they had the DOB! Confusing to say the least.

I guess that in the Vermont court system, one would have to fall back to what is the spirit of the law (REA)? Wasn't the legislative history behind a QDROs, was to "ensure that individuals satisfy their family support obligations".

In that light, I guess one could argue the theoretical importance for the need to obtain a beneficiary designation whereby if the participant is married and the account exceeds $5,000 that the spouse must be the primary beneficiary. In addition, then, couldn't spousal consent also be argued necessary should the participant seek to make the beneficiary other than the spouse, or prior to a participant obtaining a loan or a hardship?

It's kind of like an off ramp to the insane asylum, I'm stuck on the clover leaf with the feeling of chasing my tail.

I can't see how one can protect the rights of women, and yet in the same breath, say it's not applicable if you are a government entity, school district or otherwise, sponsoring a non-Title I 403(B) arrangement.

My problem is that I must support these and other administrative actions, and am hearing from another contributing Benefitslink 403b Board member (not on this thread) that none of this is applicable, since school districts are exempt from ERISA, including the J&S, Spousal Consent, Loan, QDRO and other issues whereby I support what Carol is saying...many are theoretically an issue!

Considering the consulting expense is tax dollars, and in this recession they are tight, and the IRS activity in 403(B) audits, what message should a consultant take to the School Board, "more likely than not"?

STL

:confused:

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Just a comment on the Vermont situation: the issue is that Congress specifically passed the "Defense of Marriage Act," saying that federal law (including the Internal Revenue Code) would not recognize a person of the same sex as a "spouse," even if applicable state or foreign law did. So people who come from abroad and have more than one spouse, a child spouse, a spouse who is a close relative, a person who became a spouse through forcible rape, etc., can have their marriages recognized here if such marriages were valid in their home country. However, federal law prohibits the recognition of a same-sex marriage, even if it was validly contracted in a US state or a foreign country. I'm glad Congress is out there to protect us against the real evils of the world! [Heavy sarcasm, here.]

Given that statute, I'm not sure that a court would treat an order in favor of a former party to a civil union as being to "ensure that individuals satisfy their family support obligations." However, as with so much else in this area, the law is unclear.

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The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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When Congress enacted QDROs in 1984 as an exception from the nonalienation rules of ERISA, governmental and church plans were not subject to compliance with the QDRO provisions of the IRC with one exception: 414(p) (11) permits distributions from government and church plans exempt from ERISA to be treated as made pursuant to a QDRO if they meet the requirements for a QDRO. This allows a division of plan benefits from a government or church plan to be treated as a tax free distribution if (1) the plan permits such division and (2) the dro meeets the requirements for a QDRO.

As far as civil union statutes are concerned there can be no tax free division of the benefits under a QDRO because IRC414(p) limits an alternate payee under a QDRO to a spouse, child or dependent of the participant. Relationships recognized as a a "civil union" or "domestic partnership" are not between spouses under the enaced state laws but are alternative relationships between persons of either the opposite or same sexes. That is why it called a civil union or domestic partnership, not marriage. Persons designated under these relationships are not regarded as legal spouses for QDRO purposes any more than employer provided health benefits are a tax free benefit of domestic partners who receive them because they are not legal dependents under the IRC nor can there be a tax free rollover under an IRA to a domestic partner or a person recognized under a civil union because the recipient is not a spouse under the tax law.

As far as protecting women's rights Congress has based the exemption from ERISA on first amendment grounds (churches) and 11th amendment grounds, federalism, (states). By the way the board member is right -- the only requirements that a government 403(B) plan is subject to are the requirements in Section 403(B) itself. None of the ERISA requirements, e.g., written plan document, apply. IRS audit guidelines list the requirements for govt and church 403(B) plans which are thankfully few.

mjb

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Guest STLGiant

MJB QUERY:

What about ERISA law that has been "cut & pasted" and adopted by States. My overall concern is that while a public school district might be exempt from ERISA on a federal basis, they may indeed have to comply if the State has adopted legislation mimicking portions of ERISA. For example:

Public School Districts are exempt from ERISA Fiduciary rules, ergo a district "could" have only one vendor... I see nothing under 403(B) that dictates providing prudent investments, only investments that meet contractual provision as outlined by the Code. I understand that California and Texas State law provide that no school district (public or private) can limit the right of a participant for having a 403(B) vendor--however, I think a vendor can be limited if the contract or custodial agreement doesn't meet Code requirements.

So, what if that state adopted legislation utilizing ERISA fiduciary laws? Could a district employee-participant sue the district in State court successfully as the district did not provide the employee-participants with prudent invesment choices and provided only one vendor?

Going back to what Carol said in her most recent post, what effect does State law that mimicks ERISA, be it QDROs, Fiduciary guidelines have on non-ERISA 403(B) arrangements sponsored by public schools. Has anyone on the Board looked or reviewed that issue? How are people handling this?

It should be noted that it appears that hospitals, 501©(3) orgs., non-public schools and ERISA electing church schools sponsoring 403(B) arrangements might have a DOL issue if only one vendor was offered.

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mjb,

Actually, there is now one country (the Netherlands) that does not have a separate civil unions statute, but simply allows same-sex couples to marry. Nevertheless, under the Defense of Marriage Act, such marriages are not recognized for ERISA or Internal Revenue Code purposes.

The Vermont statute is a hybrid. Although a Vermont civil union is not a marriage, the Vermont statute provides that

A party to a civil union shall be included in any definition or use of the terms "spouse," ... and other terms that denote the spousal relationship, as those terms are used throughout the law.
Nevertheless, a same-sex spouse is not treated as a spouse for ERISA or Code purposes, due to the Defense of Marriage Act. Even if a state were to allow same-sex couples to marry, such persons would not be treated as married for ERISA or Code purposes.

Also, a domestic relations order applicable to a governmental plan need not meet the requirements for being a QDRO in order to be treated as a QDRO for purposes of taxing the participant and the alternate payee. Any domestic relations order applicable to a governmental plan is treated as though it were a QDRO for this purpose. Code section 414(p).

My concern is not just with regard to the tax effects on individuals. Because my clients are all either employers or plans, I am particularly concerned about the effect on plan qualification. For example, a pension plan is not allowed to distribute benefits until the earlier of retirement or separation from service. A QDRO (in the case of a private plan) or any domestic relations order (in the case of a governmental plan) is an exception to this rule. However, if an order in favor of a domestic partner is not even a domestic relations order, does an otherwise qualified governmental pension plan jeopardize its qualified status by distributing benefits in compliance with it before the participant attains normal retirement date or separates from service?

Incidentally, health coverage to a domestic partner is not taxable if the domestic partner is a dependent of the employee. Similarly, an order in favor of a domestic partner is a domestic relations order, and may even be a QDRO, if the domestic partner is a dependent of the employee. However, the definition of dependency requires, among other things, that (a) the domestic partner is financially dependent on the employee, and (B) the relationship is not in violation of local law. It does not cover a situation in which the employee has not provided at least 50% of the domestic partner's support. This contrasts with health coverage of a spouse, which is nontaxable even if the spouse does not qualify as a dependent, or a domestic relations order in favor of a spouse, which is permissible even if the spouse does not qualify as a dependent.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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STLGiant,

Although the fiduciary standards of ERISA are often "cut and pasted" into state statutes, the penalties for violating those standards are provided by state law, not ERISA. Thus, whether an employee-participant can sue the district in State court successfully would be determined under state law. In some instances, the answer would be yes. In others, the state law might provide different penalties, or might provide governmental immunity to the district. (But see the Walker case, in which governmental immunity was held not to apply to a collectively bargained governmental plan.)

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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STL Giant: Plans exempt from ERISA ares subject to applicable state laws. If a state has adopted ERISA fiduciary provisions, then prudent investment rules will apply to the extent applicable under state law. Note- some states have adopted the ERISA prudent investor rules for asset allocation in place of the old common law rules that a fiduciary could be surchared for a single bad investment regardless of the overall performance of the portfolio.

While anyone can sue anyone else in the good old USA, a plaintiff would have the burden of pleading and proving that the use of one vendor was imprudent . This is very expensive and difficult because expert testimony would be required from a registered investment advisor that the performance of the vendors products was an imprudent investment not related to market conditions. E.g, a mere drop in rates of return is not impudent if the martket conditions have changed. Many small plans subject to ERISA use only one vendor because they do not have enough revenue to make it profitable for multilple vendors. The real issue is whether the participants have sufficient opportunity to diversify their investments, not whether there are duplicate investment choices. Many small plans use one provider because they get bundled services which cover the cost of plan administration for a low cost. There is a trade off between offering multiple providers and low administration cost. There is nothing in ERISA that prohibits an employer from using a single vendor for 403(B) plan investments.

mjb

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Guest STLGiant

Thanks MJB, a few comments.

My one vendor case involves a public school district having just a fixed annuity provider. I can see where having one vendor (a variable annuity or custodial account) could address all the issues of having an sufficient opportunity to diversify, but not with just a fixed annuity.

The administrator in me likes the idea of one vendor having "all the assets" since prior vendor MEAs (pre-2002) would likley have the cumulative contributions figures. The operative word being "likely". As to whether the MEAs issued had the proper definition of includible compensation, or the correct actual years of service is another story in and of itself...

Anyway, as to the issue of the burden of proof on the plaintiff, I'm not so sure that it would be as difficult or as expensive as your post suggests in light of some case law involving suits against insurance company GICs (prior to the issuance of 404©). If the only vendor was a fixed annuity, I think it would be quite easy to prove that a change in the market does not provide sufficient opportunity for a participant to diversify. Again, if the sole vendor product used was a variable annuity or a custodial account, I would concur with your statement.

Finally, as to expert testimony by one or more "experienced" RIAs, well that's not that expensive. Well, at least not in this state. Having grown up in NJ, the cost is probably triple of what it is in MO. Legal fees for a participant going after a big insurance/annuity company? Priceless....

FWIW, while there may be nothing in ERISA prohibiting the use of a single vendor in a 403(B) plan, I think if the sole vendor only offered a fixed annuity; one would be inviting a lawsuit, don't you think? Especially if the state in question, adopted fiduciary or prudency text of federal provisions. Are you aware of any site that illustrates which states have adopted ERISA fiduciary or prudency provisions?

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The National Council on Teacher Retirement ("NCTR") surveyed state retirement systems that serve teachers and found that 36 out of 50 use a prudence rule that is modeled on the ERISA standard. However, I would suspect that the proportion of locally run 403(B) plans that are subject to the ERISA standard is much lower. Such plans often seem to fall into a gap between trust law (which does not apply to them, because they are not structured as trusts) and state pensions law (which may not cover plans of localities at all, or may cover localities only as to their 401(a) plans).

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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From Publication 571 "Tax-Sheltered Annuity Programs . . ."

"Qualified Domestic Relations Order. You may be able to roll over tax free all or any part of an eligible rollover distribution from a 403(B) plan that you receive under a qualified domestic relations order (QDRO). If you receive the interest in the 403(B) plan as an employee’s spouse or former spouse under a QDRO, all of the rollover rules apply to you as if you were the employee."

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Guest STLGiant

Thanks Harwood, however, the original question with respect to QDROs was were non-Title I 403(B) plans, those typically sponsored by public school districts, subject to QDRO rules.

It appears the answer is that non-Title I 403(B) plans are exempt from QDRO regulations. However, depending upon the state where the public school resides, the district could be pulled into QDRO requirements under State law.

What's unanswered is which specific States have laws that mimick ERISA as to recognition of a DRO as a QDRO. Same with respect to fiduciary or prudence rules.

In addition, there is no post addressing if State law mimick ERISA for purposes of providing spousal notice requirements, mandating one's spouse as the primary beneficiary and mandating obtaining spousal consent for ANY distribution (hardship, loan, or distribution based on a triggering event) going to anyone or thing (trust) other than the participant's spouse.

The purpose of the posts is to emphasize that while we may know there are exemptions for government entities (a.k.a. public school districts) from ERISA Title I, there are also directives under Title II as outlined in IRC. However, there are some ERISA regulations that public school districts are normally exempt from that have been adopted as State law. Those State laws can "bring" a public school district into compliance with ERISA regs., not reportable to or mandated the fed, but by the hand of the State....

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Going back to your original point - which appears to be what Harwood was trying to do - public school districts don't pay federal income tax. Because of this, their only concern with Title II is ensuring that their employees get a tax benefit from their programs.

Section 403(B) deals with whether the participant can defer tax - these are tax rules, not legislative mandates like those in Title I. If you look at 414(p)(9) and (11), you will see that those rules are merely structured to preserve the tax deferral for divorced spouses who are awarded benefits - not to avoid some substantive prohibition on alienation.

If a state court orders a distributon from a public school plan, there is no ERISA preemption shield that the district can hide behind - the distribution must be made. The only question is whether the recipient can continue the tax deferral.

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STL Giant: Non litigation type persons always under estimate the amount of evidence and proof required to prevail in civil litigation, the financial resources of the defendants and the difficulty of finding competent counsel to take a complex financial case on a contingency fee. Your relaince on the GIC cases is misplaced. Unysis union employees sued the the plan fiducaries for putting 20% of the 401(k) plan assets into Executive life annuities (Exec life became insolvent). After 4 separate courts reviewed the case the final decision was that there was no breach of fiduciary duty because the plans assets had been diversified.

The Plaintiff must do more than just produce an expert who will give an opinion--- the expert must prepare a detailed research report comparing the performance of the funds in the plan with other comparable funds-- This will cost big bucks and will be disputed by the industry experts for the fund/ employer. If the employees scrimp on the costs of the expert testimony they get killed at trial or the case gets tossed out on summary judgment. The will get killed anyway because of the lack of investment advisors who are willing to take on a fund family. Also federal courts will impose monetary sanctions on plaintiffs who file frivilous claims under Rule 11b.

As far as having a single fixed annuity option under a non erisa plan u must look to the applicable state law. I have advised clients that local counsel must be retained to determine whether there is any fiduciary responsibility under the applicable law (e.g., some plans may not be the responsibility of the employer any more than an IRA would be) because the plan does not hold the assets in trust and what is the standard for review. The simpliest anwer is to use a vendor that offers more than one investment option.

Kkost- Since there is no ERISA preemption of state law, most public retirement plans are structured as spendthirft trusts under state law which do not permit the alienation of assets under a divorce decreee. The alternate payee receives a property settlement note from the employee for the amount of the alternate payee's interest in the public retirement plan which will be paid at retirement. The note may be secured by the employee's interest in other property, e.g. ,the marital residence to guarantee payment.

mjb

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mbozek,

My experience has been somewhat different from yours with regard to state plans and domestic relations orders. Most of the ones I have seen have some provision (which in many cases resembles the qualified domestic relations rules imposed on nongovernmental plans by ERISA) for honoring domestic relations orders. See, e.g., SC Code §§ 9-18-10(9), § 9-18-20(B)&©.

When advising governmental plans, I typically tell them that if a state's domestic relations law is going to treat the retirement plan assets as part of the marital estate for purposes of determining each spouse's share, it is in the interest of the participant as well as the spouse to allow domestic relations orders. This is because the alternatives impose less flexibility in planning for both parties. Having the participant receive the money, and then turn it over to the spouse, pursuant to a property settlement note requires contact between often hostile parties for many years in the future. Alternative methods (e.g., giving the spouse the marital home in exchange for the participant getting the full retirement benefit) may be impractical if the retirement plan is the largest asset, and may in any event leave the participant with a full retirement benefit but very limited assets to live on currently. Finally, the spouse's withdrawal rights may in many instances be more favorable than the participant's. (A defined benefit plan, for example, cannot pay a participant before normal retirement date or severance of employment, but it can--if state law permits--pay a spouse much earlier than that.) This gives the spouses flexibility at a time when immediate cash needs (for lawyers, and to set up two separate households) may be high.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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mbozec: My comments were limited to taxation of distributions to non-participants under 403(B) plans and the lack of a substantive anti-alienation rule under federal law.

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Carol:

You are missing my point. Property settlement notes are used in those states where state law does not allow the state retirement benefits to be divided by a qudo and there are state plans that have spendthrift clauses. The fact that the state pension benefits are included as marital assets does not automatically mean that the spouse can receive a payout of the interest upon divorce. Also a property settlement note can be paid out after divorce on an installment basis to the alternate payee.

Second many insurance companies are willing to do a tax free division of a 403(B) annuity contract under the terms of the divorce decree where the alternate payee receives his or her own annuity contract equal to the amount their interest in the employees annuity. The terms of the APs contract are identical to the employee's contract. This avoids the need to do a QDRO. ( I dont know if mutual funds can be split this way).

mjb

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kkost and mbozek,

Will I spoil the fun here if I agree with both of you? It is true that a state or local retirement system has no ERISA preemption, and therefore must comply with a valid domestic relations order. On the other hand, there may be a question is whether a valid domestic relations order can be issued. In the first place, state spendthrift trust law is as much a part of state law as state domestic relations law, so it is necessary to determine whether state spendthrift trust law may preclude a state domestic relations order from being issued with respect to the plan. In the second place, many state plans are embodied in state statutes, and many local plans are adopted pursuant to state enabling legislation. If such a statute provides that the plan is not required to comply with domestic relations orders, again it is necessary to try to reconcile the laws to determine whether a valid domestic relations order can even be issued.

mbozek, I agree that "The fact that the state pension benefits are included as marital assets does not automatically mean that the spouse can receive a payout of the interest upon divorce. " All I was saying is that a state pension plan can provide for a payout to a spouse upon divorce, whereas it in many instances cannot provide for a payout to a participant at that time unless the participant has had some distributable event. Thus, although many would assume that protecting pension assets from a divorcing spouse is always in the interest of the participant, in fact there are many circumstances in which attempts to "protect" pension benefits creates inflexibility for the participant as well as the spouse.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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