QDROphile

I think you are making a distinction without a difference. The reasonable conclusion presumes compliance with ERISA’s fiduciary standards. Since the ERISA fiduciary is always subject to the ERISA standards (which are mostly concerned with process), a fiduciary cannot come to a reasonable conclusion without regard for ERISA and ERISA informs, or even defines, what is reasonable. The point is that the fiduciary does not have a bright-line test (e.g. court-certified paper copy) and must make a judgment about what to accept based on the circumstances.

The standard is a reasonable conclusion that the order is what it is purported to be. That can be accomplished in a number of ways. In the beginning, a court-certified copy was the gold standard, but fiduciaries did not always understand was that was, so date stamped documents were accepted even though various courts will date stamp any document that is put across the counter for filing (whether or not a court order). In the days of sanctioned electronic signatures, nothing is compelling under ERISA or the tax code about hard copy, but hard copy may be comfy in this world of alternate facts. One could get comfortable with submission from someone who is reasonably determined to be a licensed lawyer if the lawyer states that the submission is an order of the court. Lawyers are officers of the court in most states and, despite reputation, are not allowed to misrepresent court matters. If a lawyer submits an order, electronically or in hard copy, with a statement that it is an order of the court, and it turns out to be bogus, then the fiduciary should report to the appropriate disciplinary body. With respect to civilians, e.g. in a do-it-yourself order, the submission should be viewed skeptically, but if it appears legitimate on its face and no other contradictory evidence of cluelessness or malfeasance is present, a fiduciary can conclude that the order is legitimate. Any uncertainty should be resolved in in a way that makes the fiduciary comfortable. One does not want to be completely subjective, but a judgment is required.

With the benefit of sleeping on it and the intervention of an actuary, I can see a DB plan that had improvidently allowed lump sum pre-retirement QDRO distributions would want to correct the error in judgment. Can you say “airline pilots” and “sham divorce” in the same breath.

Not true, but circumstances where such a plan would be tolerable for the owners are unusual.

The worst thing about TPAs is what they know that ain't so. Questions are a path to enlightenment.

And the practical reason for contemplating such a change is ... ?

Is yours a deferral only plan? The "Microsoft language" could still be helpful with respect to employer contributions.

S corp ownership and NQDC do not go very well together. Your question bothers me because of the implication that you are advising someone without the knowledge or experience to do so competently. I would feel better if you were an S Corp owner getting started on ideas about tax-advantaged savings and are exploring terminology that you have heard.

It depends on what you were awarded. If you were awarded a portion of each retirement payment and the retirement payments are suspended because of rehire, your portion might be suspended as well. X% of zero is zero. However, you should not “lose” your interest. When payments are resumed (and presumably in a greater monthly amount) your portion will resume. This would be an unusual situation. The plan might approach it differently. If you were awarded an annuity interest and started payments already (e.g. five years ago at former spouse’s retirement), your payments would probably be unaffected. I do not know what a statement of entitlement is.

We have all been speculating about what the plan has received relating to the divorce, and have been discussing the effects contingent on timing. If the plan has received nothing and does not have procedures that get into the DOL's bizzaro world of notice about an intended QDRO, then a claim by the surviving spouse can be processed and paid, leaving nothing for a late-delivered domestic relations order to operate on and legal malpractice as a potential source of consolation to the former spouse. But what happens when an order appears during the process and before the actual 100 percent distribution? And despite my confidence about the law and contempt for the DOL, it is uncomfortable for the fiduciary to stand by with information about a legitimate claim missing the boat as the fiduciary decides how fast to proceed with distribution. The practical, but controversial, solution based on a desire for the right outcome, is for the fiduciary to say, "send me the divorce decree, now" (improperly stepping into the role of legal adviser to the former spouse). ERISA is firmly based in equity, after all. Or, if you are a no-nonsense fiduciary, you have no sympathy for those who sit on their rights, and Equity will agree, at least at some point. And I would not gainsay.

I agree to disagree. Also, please do not take personally my terse and irreverent comments about blithely invoking interpleader. I was making a the comment based on observation of comments on Benefitslink about interpleader over years, not on your particular comment (although your comment was a trigger to riff about interpleader). As your response recounted, your reference was based on consideration, whether or not we agree on the outcome of consideration and the speculation underlying it. I will make one further comment about QDROs, triggered by this situation, but not in furtherance of a discussion about interpleader. The statute requires action by a plan if the plan receives a domestic relations order.* While most divorce decrees do not try to be a QDRO, they are domestic relations orders. If a plan receives a domestic relations order, it must, within a reasonable time, determine whether or not the order is qualified. If the order is not qualified, the proponent has a reasonable time to cure qualification defects. Implicit in the requirement is that distributions that might compromise the rights under the ultimate QDRO (assuming defects are cured) should be suspended pending the resolution of the proposed QDRO. Also, as a concept, death of the participant pending resolution of the QDRO does not prevent qualification and implementation, although the facts can make a mess of this concept, especially under DB plans. In short, it can be a valid and intelligent move to submit a non-qualifying domestic relations order to preserve an alternate payee's rights while efforts are being made to come up with a QDRO (very often because the lawyers are derelict in getting to the technical QDRO part of the divorce). All within a reasonable time and clearly holding other would-be distributees in full or partial abeyance without putting the fiduciary in a bind because of the delay, assuming reasonable diligence by the fiduciary in the proceedings. *Plan terms or terms of written QDRO procedures can require the fiduciary to take action before the receipt of a domestic relations order upon some notice about an intended QDRO, but such provisions are ill-advised. The Department of Labor incorrectly asserts that a plan must always take some action when notified about an intended QDRO, another demonstration of the DOL's ineptitude in this area of law.

Would your answer change if the divorce decree were submitted to the plan today? Are you assuming that a claim for benefits has been filed by one, or both, of the claimants? I think the fiduciary has to at least conform to express statutory procedural requirements. In the process, the complexity may resolve, which is one of the things required procedures are intended to accomplish. And an informed competent practical fiduciary will guide the process to an efficient resolution. And which court is going going to be happy about receiving the case before the fiduciary has completed the statutory procedures*, and do a better of unraveling the complexities of a strange plan, a strange federal statute, and matters that are currently before a state domestic relations court? And "benefit rights to spouses and ex-spouses have matured but we are not sure what they are" is the answer to the widow who wants benefits now and why the statutory claims procedures have reasonable times built in for adjudicating claims. *Courts really do not want to hear disputes, especially complex ones that involve overlap of state and federal laws and jurisdiction, so we have doctrines like ripeness, exhaustion, and abstention that will have to be addressed in the filing of an interpleader.

Correct, but those instances should be rare. The fiduciary cannot just claim, "Whoops, I've got two claims, each on its face with some merit, I will invoke interpleader." The fiduciary has to consider the claims, and may have to investigate directly or indirectly, and make some factual and legal determinations. For example, in the circumstances described in this thread, the fiduciary may have to investigate the implied claim that the former spouse had been awarded an interest under the plan before death, determine whether or not the order awarding that interest is a QDRO, and apply the correct law regarding post-death qualification of domestic relations orders (unassisted by the Department of Labor in its irresponsible failure to comply with the Congressional mandate to adopt competent regulations concerning post-death QDROs, further demonstrating that the DOL doe not understand either the law or the practicalities of QDROs) as part of evaluating the merits of the claims. If the fiduciary does its job of evaluating the two claims, it is very likely that there will NOT be an "inability of the fiduciary to decide which claim takes precedence." The glib advice to use interpleader is too easily given by those who know the basics if what it is, but do not understand how it works in practice, especially when ERISA fiduciary duty is involved. The ERISA fiduciary is not merely a bag holder who has a good faith desire to see that the better claimant gets the goods.

Golfing’s “What if” is exactly the optimal path, and if I were the Plan Administrator, I would even suggest as much in order to make life easier for the plan. It is really the job of the former spouse’s lawyer to do this, but most domestic relations lawyers do not understand procedural niceties for QDROs even if they can manage to draft a qualifying order that achieves the intent of the parties.

And that's the truth. Pfffthp!

The appropriate fiduciary has a duty to make various determinations in this matter and cannot simply punt to interpleader.

Depends on what the pre-death divorce decree (or its equivalent under applicable state law) says about the plan benefits. The decree is a DRO and does not have to be qualified, but it must say something about awarding an interest under the plan to the former spouse. Qualification defects can be cured by a post-death order. The outcome also depends on when the plan receives a DRO and what the QDRO procedures say about what is required before the plan takes any extraordinary action relative to receipt of a DRO.

I agree with jpod.

How do A and B constitute a controlled group? How does "someone purchased A" affect the factors that determine the relationship, or not?

It used to be that one could hire Judy Diamond to look up DOL filings. But some people believe that everything should be free.

Treas. Reg. section 401(a)(9)-8, Q&A-6

Most likely the only option is to provide for the split of the stream of annuity payments. There are several issues involved in doing that, depending on what the plan will tolerate, but there is a conventional way to do it. Since the annuity payment schedule is set, and ends at his death, the division is constrained by his life (and not his life expectancy.

This is part of your divorce property division. If you had a lawyer assisting you, seek advice about this piece. Seek advice anyway. Retirement benefits are often one of a households biggest assets and division of them can be confusing.

The proposed terms of the order will be presented to the domestic relations court. You can consent to its adoption (sign) or you can object and the court will decide on the terms that it approves. Ultimately it is the court's order.

And if it is a multiple employer plan, do not overlook securities law compliance.