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Yes, that is typically how it works, but Ford's QDRO Procedures will specify their procedures. You should also request a copy of that. On your first item, likely you will get some very long responses after mine explaining things in more detail, but I have seen DROs filed and approved many years after the divorce. I am not aware of any statute of limitations on QDROs. If no DRP is file and you eventually start receiving your monthly benefits, the AP can still file, but their payment options will be limited based upon the optional form you selected for yourself.

The case I was brought in on in LA cost the client $800 to do the 14 year calculation (from their date of separation to current), and the delta on what Fidelity paid the alternate payee vs what they should have was almost $100k difference. The intended judgment was simply for AP to get a $400k from 14 years ago adjusted by gains/losses...Fidelity did their very quick method of allocating gains/losses which yielded $100k less to AP than what it should have been (because Fidelity improperly weighted the contributions in favor of P over that time period). I was brought in to show the court that the AP was not trying to reach over the fence and take what was not awarded to them, I showed everyone the AP did not receive as much as was intended by the court and parties 14 years prior. P agreed Fidelity's calculation was inaccurate and the amended QDRO was entered. I'm not implying this case will have a similar outcome but it's not that costly to update and in my opinion well worth the extra money to ensure accuracy. It can be much more costly to have to go back and fix everything if post-Fidelity calculation the AP (or the P) discovers things were not done as accurately as one would hope!

Hello Mark, If the plan has records going back to the award date (which if they changed record keepers then they may not have them all), but if they do then the QDRO will put the burden of the investment gains/losses calculation the plan itself (which is where Fidelity/Vanguard/Empower comes in). However, just letting them do the calculation is ill-advised. I have testified on this very issue in CA courts that Fidelity/Vanguard/Empower methodology for making this calculation (as others have alluded to above) is flawed. If the market has returned gains then it would be in your favor, if the market has returned losses it would give you more of the losses. Regardless, it is not as accurate as you would expect and therefore I would recommend having someone manually calculate the current award and then revise the QDRO to match. That way you see the amounts now BEFORE you enter into the court order (QDRO).

And if they want to reverse it because they found out it is a taxable conversion, they are out of luck because you are no longer allowed to unwind them. They are now irrevocable.

The good ol' IRS Rollover Chart explains it clearly: Roll from: Qualified Plan (pre-tax) Roll to: Roth IRA Allowed: Yes (with a footnote) Footnote says: Must include in income.

PSP can have in-service. A rollover to a Roth IRA is taxable but there is no 20% tax withholding because the distribution is rolled over. The taxable nature of the distribution should be evidenced by the 1099R that is issued for the distribution.

Assuming that your retirement plan is a defined contribution plan, such as a 401(k) plan: After the plan determines that a domestic relations order submitted to it for purposes of dividing the benefit is a qualified domestic relations order (QDRO), the plan will establish a sub account for the alternate payee (your ex) and determine the initial balance of that sub account in accordance with the description in the QDRO, which should mirror the description in your divorce decree. How the plan will accomplish this depends on what service provider handles the accounts and the investment management. The large commercial operations (Vanguard, Fidelity, Schwab, various insurance companies) typically use algorithms to bring forward the initial balance of the sub account as of the date of the divorce decree to account for the investment results up to the point that the sub account is actually established. Once the sub account is established by subtraction from your full account balance, the sub account takes care of itself with respect to earnings and losses, and your remaining account is unaffected going forward. The “until … the date of distribution” language becomes irrelevant to you. One problem with delay is that it makes bringing forward investment earnings more difficult. Worst, if in the interim the plan changes its investment provider, the usual methodology for bringing forward investment earnings will not work in many cases because the new provider will not have adequate records and information for the account in the time before the change in providers occurred and will not be able to do the calculations from the date of the divorce decree through the date that the new recordkeeping began. If that happens, you and your former wife may have to figure out your own way to estimate the your balance as of the date of the divorce and the investment earnings on the amount awarded to the alternate payee going forward until date sub account is actually established. I use the term sub account to be technically correct. The account for the alternate payee will look like a regular account for the alternate payee, and will function as such in almost all cases. My use of the term investment earnings includes both earnings and losses. If your ex was clearly assigned the responsibility for preparing and submitting a domestic relations order to the plan, at some point your ex’s ability to enforce the divorce decree terms could be compromised to some degree. That means that any difficulties in trying to comply with the terms of the decree through a domestic relations order could fall more heavily on your ex. But everyone will be burdened by the mess.

My QDRO Alternate Payee clients will move to a new home, or remarry and take a new spouse's surname, and they will notify the Social Security Administrations, Motor Vehicle Administration, their Post Office, credit card companies, banks, everyone they know EXCEPT the Plan Administrator of the defined benefit Plan from which they are hoping to someday receive a share of their former spouse's retirement and survivor annuity benefit. I have for years included in all of my QDROs the current addresses of both parties, their personal phone numbers, and their personal email addresses. My motive is to give the Plan Administrators a second and third shot at finding the parties at significant events such as retirement and death. You administrator folks should insist upon it. David

Put yourself in her position, would you accept your offer? You would need to give your ex-wife something of higher value in order for her to forfeit something she already has. Not sure why either of you would be willing to do that. Your ex-wife is only entitled to the survivor benefits on the value of benefits you earned during your marriage. Your current wife is eligible for the survivor benefit you earned outside of the first marriage. Not saying it isn't possible, but I have never seen anyone change a QDRO after it has been accepted.

Not knowledgeable about the particulars of this case, but I cannot overemphasize the "just in case" concept. Keeping the old DRO is likely less expensive than the cost of a new QDRO that cancels the old QDRO. The original post includes an assumption that the ex-wife will never lose her current job. In my 4+ decades as a pension actuary, I've seen many things I thought would never happen. Actuaries often say, "if it can happen, it will eventually happen".

Hi Bill, if the intent was to keep your former spouse eligible for FEHB then the award should have been $1/mo in both your retiree annuity as well as a $1/mo FSSA (former spouse survivor annuity). I prepare those orders all the time and honestly, it's worth keeping intact just in case.

As you have described the situation (I do not trust the description to be accurate or complete. Among other things, I assume that the “employer” is a private employer and not church related.), the core problem is that the plan suffers from a rectal cranial inversion. The plan has no business digging into the divorce. A death certificate would have sufficed to discharge its duty to question the change in spouse designation. It was a mistake to provide anything but the death certificate, but that mistake should not have led to the current situation. My earlier comment stands. The fiduciary is breaching its fiduciary duty by undue delay in processing the distribution. Unfortunately, the fiduciary is probably not amenable to informal education about the error of its ways, and will have to be forced to let go. That path is through the formal claims procedure to make the fiduciary face and explain its actions and position. An appeal of the initial decision may be necessary, and then possibly taking the matter to federal court. One of the good cards that the participant holds is that the federal court has the ability to award costs and attorneys fees against the fiduciary. Perhaps if that threat is brought up early enough, and it inspires the fiduciary to get its own good counsel, the process can be truncated. Your question about a lawyer is timely. It would be well to have competent counsel start the written claim. That might cause the fiduciary to engage counsel that will then disabuse the fiduciary of its current position. What kind of lawyer? One who knows what they are doing. One who has a focus on ERISA practice. That eliminates most lawyers who have a divorce practice.

DSG, it’s unclear whether the other spouse’s lawyer is ignorant or trying a negotiation ploy. Either way, you won’t fall for it. Consider drawing on your deep experience with the different law that governs the Federal Civil Service Retirement System and the Federal Employees Retirement System and their regimes for a court order acceptable for processing (COAP). 5 U.S.C. §§ 8339(j)(4), 8419; 5 C.F.R. §§ 831.601 to 831.685, 838.101 to 838.1121. An attempt to specify a former spouse’s shares by reference to a factor other than a percentage of the employee annuity would get rejected as not a COAP. And even if one were to imagine that the former spouse’s COAP-paid benefit might be the employee’s income, an attempt now to negotiate the former spouse’s fixed percentage of the employee annuity by using assumptions about the employee’s marginal income tax rates for Federal, State, and local income taxes is nonsense because not only might incomes changes but also any of the tax rates might change. What might Maryland’s income tax rates be in 2034, 2044, or 2054? What if the former employee retires to Texas? What if the US decreases Federal income tax rates?

How about you inform the attorney for the participant that a proposed order with that calculation would fail to qualify under IRC section 414(p)(3)(A). If the attorney can figure out how to express the desired results, mathematically within the plans procedures for calculating and distributions, then the plan will comply with simple steps and functions. The client, the plan cannot be called upon to figure out and implement the after tax results that are desired, at least as you have described.

My only comment is that once the new spouse has “vested” because the participant has retired, anything that would defease the new spouse or “restore” the survivor annuity for an alternate payee could be adverse selection. The plan would look disfavorably on it and could assert that any attempt to add a benefit through a QDRO would force the plan to pay a benefit that the plan is not otherwise obligated to pay —,thus disqualifying the DRO. This is most starkly illustrated by your suggestion of the death of the new spouse as an opening to award some benefit to the former spouse (other than sharing the life payments to the participant, which can always be done). The untimely death of the new spouse is a great thing for the plan from an actuarial perspective. Why would the plan give that up?