QDROphile

Before I go on a socio-political economic tear, does the emplyee have the option to receive the "contribution" in cash rther than deposit to IRA?

Do you really mean "adding a Roth IRA as a plan option" or do you mean increasing the compensation of select employees and depositing the increment (or some portion of it) into an individual Roth IRA of each select employee?

As far as your phrase of concern ("The Participant shall not be required to name the AP as his surviving spouse before his annuity commencement date.") goes, it looks to me like incompetent drafting. I think the phrase has no place in a domestice relations order. It demonstrates a lack of undrestanding of DB plan benefits. It may be found in models and model language because of the recurring failure of domestic relations lawyers to deal with death beneifits properly, but it is a very bad place holder in lieu of not addressing the death benefit issue at all, which omission I believe would be malpractice. This points out that somebody needs a competent ERISA adviser to make sure that the parties understand the issue and the the drafting lawyer states the intended outcome properly in the order in a way that the plan can understnad and implement the informed intent. I think the plan's response was is a suggestion that the language was incompetent, and it got it's appropriate attention. Now that is has the attention of the parties, y'all need to reach an informed understanding and decide on the division of benefits that has the intended and fully understood outcomes. Your penultimate paragraph shows you are on the right track toward understanding. I hope you can get advice that gives everyone a full understanding of the issue.

Your description is not completely clear, so pardon incorrect inferences. Taking the perspective of the AP, the intent of the division of the pension benefit was to provide to the AP some interest in the death benefit (an assumption). That would not be surprising -- the death benefit is an important element of the entire benefit. For some reason (bad drafting, bad interpretation) the plan read the order as not providing an interest in the death benefit and was competent in its procedures to make that interpretation clear (probably becuase the plan suspected that the omission was not intended). You like that interpretation, but it is not what was intended in the divorce settlement. Just as the plan said, if the plan got it wrong, then the order needs to be corrected by submitting an amended or superseding order. That is what the AP is working on. It is all about implementing properly what was intended by the state court order, not how the plan interpreted the words of the order. You can contest the AP's position about what what was intended/agreed in the divorce proceeding, but that contest occurs in state cocurt and the interpretation by the plan of the original order is irrelevant (my opinion). The AP's rights are what the state court awarded.

Because you appear to be a fiduciary in some capacity (maybe not the one with direct responsibility, but one with monitoring responsibility) you have a duty to follow ESOP Guy's advice. You have taken the first steps in discharging that duty -- informing yourself about what is going on as you step into your role, and then asking questions about what you do not understand or appears odd to you. The appraiser may not know or may misunderstand how the company is using the appraisal for non-ESOP transactions, e.g. believing that the valuation number is post-sale to to the company by departing employees. The questions of who "owns" the appraisal and permitted use of the appraisal is important to everyone, including the appraiser.

I would worry more if the place holder were 666.

Clarification: You MAY need to file a claim for benefits. The plan administrator may correct any improper reduction in your benefit informally based on having the mistake pointed out. Then it is the plan administrator's separate concern about the overpayment.

Why do you think you need recourse? First check with the plan administrator about your benefit. If it is not what it should be, then you need to file a claim for benefits. You should be able to do that without starting payment. If your benefit is improperly reduced because of the mistaken calculation of the AP benefit, then you will need to proceed through the claims procedures to get a correction. If your benefit was not adversely affected, overpayment to your ex is not your concern.

I thnk the point of the discussion is that the provider will only take payment in the form of a charge to the trust assets. To the extent that certain fees and expenses are eligible for employer payment or reimbursement (not all are), that can be handled by separate billing/payment, not charged to trust assets, subject to compliance with the applicable PTE (depending on the nature and timing of the reinbusrement arrangements).

Documents are just pieces of paper, and not always that. It depends on what is written on the pieces of paper, such as which terms are identified as composing which plans. The number of staples does not the number of plans determine. However, not all IRS or DOL agents understand this. Yes, the reference to DOL is gratuitous in this case.

This is not helpful in response to your question, but how is the plan going to comply with the requirement that the trust to be within the jurisdiction of US courts if there is no US connection?

You might look at the securities law aspects.

Insightful.

I respect your counterpoint about fiduciary responsibility and I think my agreement was implicit in reference to interpreting the "QDRO procedures and plan", and I was not suggesting that a fiduciary was to give anything away. I am not going to be much help to you because 1) I do not know what "completely severed" means, 2) I do not believe that there is such a thing as a truly separate interest (check out the section 401(a)(9) regulations), and therefore, 3) I do not care to imagine what a compliant "completely severed" interest could look like. This is not a well thought out response, but I go to first principles and stand on the idea that a QDRO should not cause the plan to pay more that it was designed to pay (a concept also found in section 414(p), although the plan sponsor can provide otherwise by its choice of plan terms). That may be what the plan sponsor did with the "completely severed" approach. It is compliant to have a separate interest that allows an alternate payee to escape the risk of death of the participant relative to a QPSA (with appropriate actuarial consequences), but to require the plan to pay a subsidy when the condition for the subsidy (participant retires in accordance with the terms of the subsidy) fails is a step beyond, and I would not infer it. I would want to see it expressly provided. To analyze further, I could go into questions about what was the purpose and intent of the early retirement subsidy and a whole lot of thinking that I would do if asked at my hourly billable rate, but ... . So my lazy predeliction is that the subsidy is not "translated" to fit a separate interest of an alternate payee (unless otherwise expressly provided in the plan -- or maybe QDRO Procedures, somehow). Either the subsidy conditions are met, and the alternate payee can share in the subsidy, if provided, or they are not met and there is no subsidy for nobody (I deliberately use the colloquial double negative, so don't ding me for grammar).

The Plan's written QDRO Procedures should deal with early retirement subsidy, such as whether it is required to be expressly awarded in the order to be included, or if it it awarded (and how) as a default unless the order provides otherwise. It doesn't? I am shocked that someone in the business of providing QDRO services and documents would overlook the issue. The fiduciary will have to interpret the QDRO procedures and plan to decide what is implied. Keep in mind that the fiduciary is required to act in the best interests of the plan participants and beneficiaries. An alternate payee is treated generally as a beneficiary.

"Nothing I can really do about that other than take it out and get it taxed." You might look into the use of qualified charitable distributions.

I am confused by her ability to "contribute" $26,000. In a 401 (k) plan, an employee's elective deferral limit is $19,500 for 2021. The Roth contribution feature lives by the elective deferral limits, too. A well-drafted Summary Plan Description would describe contributions, contribution and deferral limits, and calcuation procedures, and would have illustrations and examples. Start there to understand how the plan works.

This response is invalid because it does not take into account all circumstances and plan terms. If the plan is subject to ERISA, which it might be, then plan terms, including whatever beneficiary designation is on file, controls. A separation agreement, unless incorporated into some sort of domestic relations order, is ineffective. If the plan is not subject to ERISA, then controlling law may provide for a different outcome.

The very broad and general answer to your very broad and general questions is negative. Circumstances matter, because the plan administrator is required to act prudently under the circumstances in following the terms of plan documents and the law. Treating your example, and adding details and focus relating to the joint and survivor annuity (J&S) rules applicable to most private pension plans, if the participant were on record with the plan as married, and then got divorced, and then retired and applied for benefits without advising the plan administrator of the divorce (and the plan administrator having no other notice or knowledge of the divorce), the plan administrator would likely process the benefit as though the particpant were married and comply with the applicable J&S rules. That means that the apparent spouse would be givien information about the survivior annuity benefit and the participant would receive that benefit (with the apparent spouse as contingent annuitant) unless the apparent spouse consented to a different form of benefit. The plan administrator would not question the marital status. But that is not the end of it. By not revealing actual marital status when that status is matierial to the benefit, the participant and former spouse are committing fraud, which, if discovered, would result in consequences too varied and complicated for speculation. If the participant stated that the participant were no longer married, the plan administrator would probably ask for proof (not automatically search itself), because the spouse of a participant has rights that the plan administrator is charged with protecting. Your question is redolent of nefariousness. Or are you simply concerned with specific requirements of fiduciary responsibility?

A formal claim for benefits is certainly a powerful device for engaging the plan administrator concerning alternate payee rights and benefits. However, depending on the nature and posture of the benefits, a claim can easily be denied, without providing much information. For example, if benefits are not distributable, the claim can be denied by saying benefits are not distributable, and the denial need not include a calculation of benefits that are not distributable. A carefully crafted claim could be more revealing, even if the claim were denied. But that is the crux of your problem. You do not seem to either know enough or have enough understanding of the QDRO or the plan to be able to craft a sophisticated claim. No matter what, you need to review the terms of the QDRO and the plan’s summary plan description to form a base of understanding to be able to engage fruitfully.

The first answer is not particularly helpful: an alternate payee has the rights of a beneficiary. The second answer is that it depends on several factors, including the terms of the order and status of the interest relative to accrual of benefits and eligibility to start benefits. From some inferences, I would say don’t count on it. In particular, don’t count on a calculation of the value or prospective payment amounts of your portion of the benefit. The third answer is that many plan administrators are accommodating and will provide you the information with respect to your interest, or will at least convey information from the last benefit statement to the participant. It depends on the practices and policies of the plan and the personality of plan administration personnel.

The plan administrator would be the best place to start. It might not be possible to answer your questions yet. You do not provide enough information. It is not the administrator’s duty to give you a tutorial about the QDRO works in your case. You should be able to learn if a lump sum distribution is available to you, but you could just be referred to the summary plan description and the terms of your QDRO for your answer.

I have no particular quarrel with what is posted above, But the responses other than from Bill Presson presume that you are just dealing with the substance of a domestic relations order to divide the pension. To get there, you have to re-open or start a new domestics relations proceeding to capture the marital asset that was left out of the original proceeding. That requires expertise in state domestic relations law and the omission may affect what the court would be willing to award you as a supplement to the original property division. Your original lawyer might be the person you need, or you may wish to engage someone else, in addition to the QDRO expertise mentioned above.

States can determine state tax policy through law as they see fit, subject to federal constitutional limits. No comment on interpretation or implementation of the law.

Where do you want to start?