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Termination after settlement but before QDRO entered


Salt1968
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I'm really trying to see if this should throw a "Red" flag. The parties enter into a settlement wherein the alternate payee is paid 50% of the payee's Defined Benefit Plan. This is a small business. After the Consent is signed but before the QDRO is entered the Plan is scheduled for termination by the Plan administrator. The "Plan administrator" happens to also be the Participant. Could this affect the alternate payee's 50%? Something just doesn't feel right. I'm afraid someone is trying to pull a fast one. The participant has not retired at this point. They are asking that the QDRO, after initial review include termination language.

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The domestic relations order can proceed and the outcome will be determined by the timing of delivery of the order to the plan and the timing of the events in the plan termination. The termination itself does not prevent the division of the benefit, but the termination may affect how the division is done and the options available. If the plan is liquidated before the order is delivered, the order may be thwarted. The participant may encounter some trouble in the state court if that happens.

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"The participant may encounter some trouble in the state court if that happens." Especially if the participant and the plan administrator are the same person, creating at least the appearance of a deliberate attempt to thwart the court order and the ex-spouse's rights under the divorce settlement! It would be difficult (if not impossible) for the plan administrator to claim ignorance that the ex-spouse will be filing a DRO claiming a portion of the benefit, even if a DRO has not been filed yet. Under the circumstances, it would be appropriate to not pay anything out with respect to the participant's benefit until all of the paperwork has been received and reviewed.

Always check with your actuary first!

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The role of the original poster may be relevant. Counsel?

If you are the TPA/consultant, then you may wish to step away from the line that looks like legal advice. This situation begs for the advice, "Please talk to your ERISA counsel. If you need a referral, I can provide a couple of names."

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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Hi, No I'm not counsel. I promise. I'm just trying to figure this out. It just seems weird that this would happen and I'm trying to see if this has any effect on the alternate payee. I'm a legal assistant and don't have anything to do with the Plan Administrator. I draw up the QDROs for all different plans and this is the first time I have come across a termination and don't really understand how this works.

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