QDRO for Top Hat Plan

[ERISA25]

My question is whether a top hat plan has to supply information as required by Title I of ERISA if it receives a QDRO. Although top hat plans are exempt from Parts 2, 3 and 4 of Title I of ERISA, they are subject to Part 1, which includes reporting and disclosure requirements, and Part 5, which includes criminal penalties for willful violation of the reporting and disclosure requirements.

ERISA Sections 104(b)(4) and 105 are included in Part 1 of Title I. A plan administrator will, however, be deemed to satisfy the reporting and disclosure provisions of Part 1 by filing a top hat filing with the Secretary of Labor. Thus, it seems to me that if a top hat filing was timely made, the plan administrator does not have to comply with any reporting or disclosure requirements under Part 1.

My question has two parts: 1) if a PA receives a signed authorization from particpant to release top hat plan info to requesting attorney (atty drafting qdro), does the PA have to distribute such information; and 2) does a top hat plan have to comply with a QDRO?

[jpod]

I would begin by explaining to the atty, with citations if necessary, that the QDRO rules do not apply to top-hat plans, and, therefore, any state law basis for giving the other spouse an interest in the plan benefits would be preempted by ERISA. With that said, what does the plan say about assigning plan benefits to a third party, in a divorce or otherwise?

I realize there are some cases out there in which courts mis-applied the QDRO rules to plans that were not subject to the QDRO rules, but the fact remains that the opinions in those cases were wrong.

[ERISA25]

I would begin by explaining to the atty, with citations if necessary, that the QDRO rules do not apply to top-hat plans, and, therefore, any state law basis for giving the other spouse an interest in the plan benefits would be preempted by ERISA. With that said, what does the plan say about assigning plan benefits to a third party, in a divorce or otherwise?

I realize there are some cases out there in which courts mis-applied the QDRO rules to plans that were not subject to the QDRO rules, but the fact remains that the opinions in those cases were wrong.

I was wondering if you know of any support for this position, other than the regulation I cited in my post. Do you know of any cases, dol guidance, etc. supporting the position that the QDRO rules do not apply to top hat plans. I agree with you, by the way, as you can tell by my original post.

[jpod]

The only support I have is the law itself, which should be enough for any judge, but unfortunately that has not always been the case. The QDRO rules are set forth in part 2 of Title I of ERISA. Per Section 201(2) of ERISA, part 2 does not apply to top-hat plans (or to welfare plans).

[mbozek]

The only support I have is the law itself, which should be enough for any judge, but unfortunately that has not always been the case. The QDRO rules are set forth in part 2 of Title I of ERISA. Per Section 201(2) of ERISA, part 2 does not apply to top-hat plans (or to welfare plans).

If the QDRO rules do not apply to plans exempt from part 2 of title I of ERISA, why is it that so many courts disagree with you? In Met life v. Wheaton, 42 F3 1080, which held that QDROs applied to welfare plans, Judge Posner stated "we cannot understand why if a QDRO can override the designation of beneficiary in a pension plan, as Congress decided it can, Congress would not have allowed such an order to override the designation of beneficiary in a welfare plan."

See the following the cases concurring with the 7th circuit- 935 F2 1114, 206 Fsupp 191, 283 F3d 436, 164 F3d 857, 119 F3d 415, 82 FSupp 1346.

Even courts which have held that QDROs do not apply to welfare plans have decided that ERISA does not preempt a state divorce decree that invalidated a beneficiary designation under a LI plan. 66 F3d 944. In the 8th circuit state divorce decrees are given full effect in a welfare plan whether or not they comply with QDRO requirements.

The theory that QDRO rules only apply to pension plans subject to the non alienation provisions of ERISA appears to be a minority opinion. 661 Fsupp 365 (dicta), 934 F2d 1193.

There is also one case applying QDRO rules to a top hat plan: Bass v. Midamerica, 1995 WL 622397, citing Wheaton.