QDROphile

Sorry, this is out of my league. This appears to be a government plan and government plans live mostly by their own rules, complicated by use of unique terminology, which among other things, prevents you from translating the government planspeak into information that might be useful for analysis. You need a professional, probably a lawyer, who is familiar with the NYCER plan to unravel this.

I was just complimenting Lou S.

So you are now going to report your conclusion based on "Lou S says"? That is a decent answer on these Boards, but pretty lame in the wild world.

It is difficult to respond with any confidence without full information, and you will not be able to provide full information here. You will not be able to get a competent, correct, and complete answer here. You (your mother) needs professional assistance to evaluate and pursue her interests. However, it may help to get some learning and guidance here if you provide some additional information here, and it would be better if you started a new topic rather than confuse or divert a current topic. There is a "Start New Topic" button at the top. Additional information to provide: What is NYCER? Is the pension a defined benefit pension plan? Is the employer a government or government instrumentality or a private company? Did your father start his pension benefits before or after the divorce, or before or after his death? In what form was the pension paid -- if being paid (e.g. single life annuity, joint and survivor annuity)? What forms of payment are allowed by the plan? Where did the "death benefit come from? Did your father remarry? If so, was it before or after his pension payments started (if they started)? Possible outcome, based on ignorance of relevant facts and assumptions to fill the gap: Your father did not remarry and he started his pension after the divorce. The pension plan provides that participants unmarried at the time of start of benefits can receive only a single life annuity. This is a common pension plan design. That means that your father would receive pension payments for his lifetime that would cease at his death and no further payments would be made to anyone regardless of beneficiary designation. The pension plan operated properly and your mother gets nothing. That does not mean she has no claim against your father's estate because of the pension failure, but that is where you leave the realm of this website and need personal professional advice.

Perhaps you could edit the following; I cannot make out your point: "An order is a QDRO whether the plan determines that the order is a QDRO. In fact, courts may overrule plan QDRO determinations."

If the employer wants to give the former employee $900, then the over-distribution should be returned and the plan made whole in accordance with proper correction principles, the employer can pay $900 in a separate transaction. Unless it is done this way, the IRS (and state taxing authorities) can assert some tax violation, such as evasion of payroll taxes. The IRS sees payments in an employment situation first as regular salary or wages. The taxpayer/employer can be put in the position of showing a payment is something else (which usually has better tax consequences to the taxpayer than ordinary salary/wages).

The $300 limit is in ORS 243.507(8). The administrative rules of the plans, such as the PERS rule cited by Fiduciary Guidance Counsel are, and must be, consistent with the statutory limit. Thanks for digging out that statute so I could see what I overlooked in my original search.

I regret that I could not dig up the citation after some evidently inept searches, but it is an Oregon statute and I believe the maximum that a government retirement plan can charge for processing a QDRO is $300. That belief is supported by administrative rules of several government retirement plans in Oregon (that I found easily) providing for a maximum $300 charge, which would be consistent with the statute. The statute is a really good example of bad drafting for various reasons. I fear that the bad drafting may result in uncertainty about applicability to government 457 plans, if that is where you are going.

Sun Life v. Jackson suffers from the idea that the anti-assignment provisions applicable to "pension" plans applies straight across to welfare benefits. But the point is well taken. When the drafting is not focused on the goal (qualification requirements), the plan administrator has a more difficult job of interpretation. This phenomenon is also found in orders drafted by lawyers who do not understand retirement plans or the law and try to cover the gap by throwing more words into the order in hopes of scoring a hit. On the other hand, that problem is in part the fault of plan administrators who do not know what they are doing and only know an inflexible word formula to apply to determination of qualification. #ill-advisedmodelQDROforms

To get down to fundamentals, look at the definition of domestic relations order (a divorce decree is included) and then the requirements for what is necessary for qualification — what must be or not be included in the terms of the order.

Generically, beneficial interests are everywhere. They are distinct from, but go hand in hand with legal interests. The legal owner is the owner that has title to property and must be the one that executes buying and selling. If the legal owner is subject to terms that make the ownership for the benefit of another, the other is a beneficial owner and the legal owner has a fiduciary duty to the beneficial owner. What the benefit and the scope of the fiduciary duty is determined by doe instrument, such as a trust agreement/instrument, or common law (unwritten or implied). For example, someone might have a beneficial interest in interest (but not principal) of a bond, or might have a beneficial interest in both the principal and interest. The bond would be owned by the legal owner, subject to the rights of the beneficial owner(s). A beneficial interest also falls under the term “indirect ownership.” This is a very broad and complex subject of property and contract law. Beware acting or advising on your own conclusions based on labels.

Yes, I have seen that. There are at least two phenomena. One is legitimate; the former spouse has a protective order and uses the lawyer's address to prevent discovery. The other is the lawyer trying to assure payment out of certain funds. Not that getting paid is illegitimate, but I believe the anti-assignment rule does not allow anyone to get out in front of a distribution. How one enforces a creditor claim after the funds are in the hands of the appropriate recipient is not the plan's concern. I have been involved in discussions about provisions concerning allowing the division of nonqualified deferred compensation in divorces and potential effect on negotiation of property settlement in divorce. Generally I think it is better to allow all assets to be on the table. By removing or restricting a significant asset, the settlement can get skewed against the interests of both parties. At least with highly paid or wealthy participants, the value of the unavailable/restricted asset is still taken into account, which means that some other asset must be divided disproportionately. Not that proportionate division is sacred, but my Econ 101 class tried to convince me that individuals were always better of by having a choice about allocation of resources.

Although I was ambivalent about it at best, I had a client that restricted distribution to discourage what the client said was actual experience with raids on the retirement plan via sham divorce, e.g to buy the recreational fishing boat. This was long before the sham divorce cases were decided. The very sad economics in many divorces is that the (usually female) former spouse has to (or does, in any event) take distribution in order to pay the divorce lawyer* and otherwise get by after the divorce. *This gets us into the completely unrelated topic of attempts by divorce lawyers to be named directly or indirectly as a payee or otherwise get first crack at the QDRO distribution, which is troublesome for the plans.

Last pragraph: One person’s scare is another’s marketing effort, but I agree that both deserve skeptical consideration

And if the contract says fees can be charged, but the administrative fees were covered otherwise as a regular practice*, the practice could have reformed the contract, so the contract term to charge the fees to the participant account is no longer effective and cannot be resurrected. *This is potentially an interesting issue -- possibly a disguised contribution.

Yes, breach of contract.

If the business is conducted in the US and has US employees (or other eligible US domiciled employees), it is likely the the US business is a subsidiary of the PLC, organized in a recognizable form under US state laws and tax law: e.g. corporation, S corporation, LLP, LLC, and the check-the- box option for tax treatment is available as appropriate.

My first inclination is to mostly agree with Larry Starr and say the the order can specify that the alternate payee's subaccount(s) can be created as of a specified date by designating x% the participant's mutual fund portfolio and y% of the participant's pooled fund account (or dollar amounts from each, which can be translated into percentages). Part of my approach assumes certain limitations on the mutual fund platform. Fidelity,for example, has lots of limitations, to the point that I think Fidelity puts the plans at risk of violation of the law. I would modify depending on exactly how the mutual fund platform and pooled fund worked and what the participant is able to do by way of transfer of funds. System capabilities are a big factor. For example, if the pooled fund is valued only annually, then any division of the participant's pooled fund interest would have to fit with what the plan is able to do administratively with pooled fund balances. At the extreme, the AP's pooled fund interest would have to be specified as a dollar amount or a percentage of the balance as the the valuation date. If the mutual fund platform has great administrative capability and flexibility, then the plan should be able to accommodate even a specification of the AP's share of each investment. The limitation is IRC section 414(p)(3)(A).

I saw nothing about 403(b) in Spatel’s post.

And they are barred.

The elective deferral limit is personal (401(k)); The 415 limit is based on the employer. You should get advice about what type of retirement arrangement would be best for your presumably separate business.

What is a revised QDRO going to do? The plan is out of the picture with respect to money distributed under the original QDRO. If the former spouse rolled over the distribution (or enough of it), it may be possible to get the domestic relations judge to order a transfer of a corrective amount from the former spouse IRA to an IRA of the plan participant.

Thanks to Larry Starr for focusing on the question. I see now that you are asking from the perspective of the plan, and I am refining my response accordingly. As Larry Starr confirmed, the plan follows its terms and pays the designated beneficiary in regular course (no special speed up or slow down -- just follow usual procedure; well, maybe speed up :-)) unless the plan receives a DRO before the distribution. If the plan receives a DRO then distribution to the beneficiary is suspended while the plan follows the rules of IRC section 414(p), and determines if the DRO is qualified or not. Then proceed accordingly and there is now quite a bit of law about what that means. Make sure you understand what a DRO is. It does not have to say "I want to be a QDRO" on it. For example, the child support order could be a DRO and could be submitted (knowing that it will not qualify) to delay while the plan processes according to legal requirements and plan procedures, including notices, and the proponent tries to get a "real" DRO that could qualify. Now for one of my favorite subjects. The Department of Labor does not understand the law governing QDROS and is of the mistaken belief that if the plan knows that someone is trying to get a DRO to submit to the plan, the plan has to hold any distributions in abeyance to the extent the would-be QDRO would succeed in capturing some or all of the balance of the account. If the plan is ill-advised, it might include the DOL's faulty position in its terms or written QDRO procedures. If the plan is unfortunate enough to have done this, then the plan has to follow its own terms and procedures. Result: if the plan reasonably knows that someone is trying to submit a DRO, it has to delay distribution to see about it. What is "knows" and how long to wait? The plan makes its own bed by introducing the bad concept into its terms or procedures, so the terms or procedures should answer all the questions -- HA!

It depends first on state domestic relations law. One must have a DRO before getting a QDRO. Child support could be encompassed in a state’s domestic relations law. There is also another approach that allows states to enforce child support through orders, again based on state law. There have been posts on the subject. I forget the cite to the US Code. Search for posts by Mbozek. How the law treats post-death enforcement will be an issue and will depend on applicable state law and rule of the child support agency. Beyond state law, you have a timing issue. The plan is going to pay the designated beneficiary unless timely stopped. A DRO will suspend a pending distribution, at least until qualification can be resolved. Nothing in QDRO law prevents a post-death order.

A QDRO is part of a property settlement, however: 1. Whether or not a property settlement or domestic relations order can precede the finalization of a divorce is a matter of state domestic relations law. I suspect that in most states finalization is not required. In practice a QDRO usually is attended to at or after the finalization of the divorce or legal separation, and after the property settlement has been finalized, see #2. 2. Most domestic relations orders that want to be QDROS are derivative of property settlement terms that are established in some other domestic relations document, such as a property settlement agreement or the divorce decree. QDROs are usually not stand-alone statements of the property settlement relating to retirement benefits; they may provide extra detail especially relevant to the retirement plan. We see many questions about what happens if the QDRO is or wants to be inconsistent with the property settlement terms expressed in another court-approved document. This post is way beyond the relevant discussion for the original post, but it reinforces the comments above that the matters relevant to property division are still kicking around in the domestic relations proceeding in state court. To focus on "QDRO" is premature.