fmsinc

The only reported case discussing the valuation of a non-qualified and unfunded deferred compensation plan seems to be Douglas v. Douglas, 281 A.D.2d 709, 722 N.Y.S.2d 87 (2001), holding that a non-qualified and unfunded deferred compensation plan was capable of being valued for marital property purposes. Said the Court: [unfunded] “Next, plaintiff argues that his ability to collect from the unfunded, non-qualified retirement plan is too speculative to be valued as a marital asset. In support of his argument, plaintiff points out that since the plan is unfunded, payments are dependent upon the partnership remaining profitable and that to be eligible, one must be a partner for 10 years, be 50 years of age, not leave to compete with the partnership in another firm, and retire. Since plaintiff was not 50 years of age on the date that the action was commenced, his expert attempted no valuation of his interest, asserting that it was valueless. To the contrary, nonvested pensions are subject to equitable distribution (see, Burns v Burns, supra, at 376) and the uncertainty associated with the fulfillment of the conditions precedent to the receipt of such nonvested pensions does not present a significant impediment to a fair and realistic distribution of this type of asset (see, id., at 376). “Defendant's expert, on the other hand, noted that no partner had left plaintiff's firm to work for a competing firm in over 50 years and that historically the partnership was profitable enough to make payments called for by the plan to retired partners. Moreover, the expert assumed, and the record discloses no evidence to the contrary, that plaintiff would continue as a partner (in fact, he has more than 10 years as a partner in the firm and is now age 50), and he valued plaintiff's interest in the retirement plan at $412,700, $460,400 or $479,400, depending on whether plaintiff retired at age 50, 56 or 62. Given the uncontroverted evidence of valuation, Supreme Court did not abuse its discretion by accepting the valuation ascribed by defendant's expert (see, Ferraro v Ferraro, supra, at 598). Lastly, there is no merit to plaintiff's contention that the Majauskas formula (see, Majauskas v Majauskas, 61 NY2d 481) [Bangs/Pleasant in Maryland] should have been employed by Supreme Court since this formula need not be used where, as here, "a lump-sum payment discounted for present value" may be made to effectuate distribution of pension benefits (Mullin v Mullin, 187 AD2d 913, 915; see, Majauskas v Majauskas, supra).” See also an interesting case from Louisiana, Knobles v. Knobles, 236 So. 3d 726, 5th Cir. 2017, where the Louisiana Court of Appeals held that a “restoration plan” adopted long after the termination of the marriage was computed with reference to time during the marriage that the Participant was employed by the company in question. Said the Court: “Although Mark did not qualify for the Restoration Plan until his compensation from Chevron exceeded the applicable annual compensation limit, well after the community ceased to exist, the benefits Mark will receive under the Restoration Plan are calculated based in part on his credited service years accumulated during the existence of the community with Kay. Mark's years of employment during the marriage factored into his right to receive the increased accrued benefits of the Restoration Plan once it became effective and Mark met the requirements; thus, the community has an interest in the whole of the accrued benefit. See generally, De Montluzin v. Martinez, 94-1805 (La. App. 4 Cir. 2/23/95); 652 So.2d 71, 76-77, rehearing denied, (La. App. 4 Cir. 4/19/95). Because Mark's years during the marriage were used to determine his eligibility for participation in the Restoration Plan, we find that Kay is entitled to a right-to-share in one-half of the portion of the plan that is a community asset, despite the fact that a determinative value came into existence many years after the dissolution of the marriage. See, Sims, supra. Although the Consent Judgment between the parties anticipated the community property portion of the Restoration Plan as an undiscovered asset, Kay would have ultimately been entitled to that community asset through applicable jurisprudence and community property laws.” But see D.S. v. D.S., 217 Conn.App. 530, 289 A.3d 236 (2023) that reached the opposite conclusion as the Douglas case. In D.S. the decision was based on the opinion of the expert, Harrison, a CPA, that: "As an initial matter, Harrison noted, the provisions for retirement payments set forth in the partnership agreement are not funded and are not carried on the firm's books as a liability. Rather, retirement payments are disbursed from the firm's future earnings. Harrison found it significant that the provision for retirement payments is subject to termination or reduction at any time by a vote of the firm's partners. Harrison pointed out, as well, a provision in the partnership agreement reciting that the payments to a retiree could be adjusted by the firm's compensation committee and the concurrence of a certain number of partners on their determination that the payments are no longer fair to the remaining partners or the firm, or are otherwise inappropriate or inequitable to the former partner. Retirement payments also could be adjusted, deferred, or simply not paid, if the payments to retired partners exceed a certain percentage of the firm's income. In that event, the partnership agreement provides, payments to retirees may be deferred and not paid for up to five years and, if the payments cannot be made during the period of deferral, the obligation of the firm to make payments could be extinguished forever. Distinguishing the partnership retirement provisions from a qualified pension plan, Harrison characterized the defendant's potential to receive retirement payments from the firm as "the epitome of a mere expectancy." (Emphasis supplied.) What this mean is that even if the plan is unfunded, it can still be paid out as long as it's being paid out. Can a NQDC plan be enforce by a QDRO? Yes, if the Plan elects to do so. See the Foley and Lardner article at - https://www.foley.com/insights/publications/2018/09/nonqualified-retirement-plans-divorce-you-may-be/ But see 29 U.S. Code § 1051 that states: “This part shall apply to any employee benefit plan described in section 1003(a) of this title (and not exempted under section 1003(b) of this title) other than— (1)an employee welfare benefit plan; (2)a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees;” (Emphasis supplied.) And here is another twist: See Milligan v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 25-1385, — F.4th —-, 2026 WL 1041935 (4th Cir. Apr. 17, 2026), https://cases.justia.com/federal/appellate-courts/ca4/25-1385/25-1385-2026-04-17.pdf?ts=1776450633 where the Fourth Circuit affirmed a district court’s order granting summary judgment to Merrill Lynch, holding that the company’s WealthChoice Award program — an unfunded contingent cash incentive requiring eight years of continuous employment to vest — is an excepted bonus payment plan under 29 C.F.R. § 2510.3-2(c) and does not qualify as an ERISA-covered employee pension benefit plan. It might have been marital property had the employee remained on the job for the required eight years. But he did not and the “bonus” was lost. Is that dissipation? Let me know what happens.

One of the issue that rears its ugly head in top-hat plans is that the benefit are not funded, that is, unlike a defined contribution or a defined benefit plan, there is no cash in an account to pay the promised benefits - or is it unfunded? On the issue whether the 2012 SERP was "unfunded," the court notes that ERISA does not define this term, and the Fourth Circuit has not previously interpreted its meaning. However, in Demery v. Extebank Deferred Comp. Plan (B), 216 F.3d 283, 285 (2d Cir. 2000), the Second Circuit addressed whether a plan was unfunded where: 1) the employer took out life insurance policies on its employees to help pay for its obligations under the plan and 2) the proceeds of the policies were kept in an account entitled Deferred Compensation Liability Account. In Demery, the court first recited its previous holding that a plan is unfunded where "benefits thereunder will be paid solely from the general assets of the employer." Id. (citing Gallione v. Flaherty, 70 F.3d 724, 725 (2d Cir. 1995)). Then, the court adopted the following inquiry as instructive: "can the beneficiary establish, through the plan documents, a legal right any greater than that of an unsecured creditor to a specific set of funds from which the employer is, under the terms of the plan, obligated to pay the deferred compensation?" Id. (quoting Miller v. Heller, 915 F. Supp. 651 (S.D.N.Y. 1996)). Applying the above test, the court held that the plan was unfunded. Id. at 287. Of particular importance was the plan's express terms, which stated: [T]he Employer's obligation to make payments to any person under this Agreement is contractual and ... the parties do not intend that the amounts payable hereunder be held by the Employer in trust or as a segregated fund for the Employee.... The benefits provided under this Agreement shall be payable solely from the general assets of the Employer, and neither the Employee, the Beneficiary, nor any other person entitled to payments ... shall have any interest in any specific assets of the Employer by virtue of this Agreement. Employer's obligation under the Plan shall be that of an unfunded and unsecured promise of Employer to pay money in the future. Id. Based on those terms, the court concluded that the participants did not have a greater legal right to insurance proceeds than that of an unsecured creditor, thus the plan was unfunded as a matter of law. Id. Other circuits addressing this issue have reached similar conclusions. See Reliable Home Health Care, Inc. v. Union Cent. Ins. Co., 295 F.3d 505, 514 (5th Cir. 2002) (holding that a plan was unfunded for purposes of ERISA, even though plan benefits were technically funded through an insurance policy, since plan participants did not own the insurance policies, and their only right under the plan was to designate death beneficiaries); Belsky v. First Nat. Life Ins. Co., 818 F.2d 661, 663 (8th Cir. 1987) (holding that a plan was unfunded where an employer "obtained the insurance policy with the intention that it could be used in funding the Plan" but "the language of the Plan ... specifically avoids making a direct tie between the insurance policy and the Plan"). Here, as in Demery, Belsky, and Reliable Home Health Care, defendant HSM purchased life insurance policies on the recipients of an ERISA-governed plan, the 2012 SERP. The express terms of the 2012 SERP provided: The obligation of the Company to make payments hereunder shall constitute a liability of the Company to the Executive. Such payments shall be made from the general funds of the Company, and the Company shall not be required to establish or maintain any special or separate fund, or otherwise to segregate assets to assure that such payments shall be made, and the Executive shall not have any interest in any particular assets of the Company by reason of its obligations hereunder. Nothing contained in this Agreement shall create or be construed as creating a trust of any kind or any other fiduciary relationship between the Company and the Executive or any other person. To the extent that any person acquires a right to receive payment from the Company, such right shall not be greater than the right of an unsecured creditor of the Company. (Am. Comp. Ex. 1 (DE 6)) (emphasis added). Mirroring the plan's terms in Demery, the above language makes clear that 2012 SERP benefits are paid out of defendant HSM's general funds, and 2012 SERP recipients' rights to those funds are no greater than those of an unsecured creditor. Accordingly, under Demery, Belsky, and Reliable Home Health Care, the 2012 SERP was unfunded as a matter of law. Plaintiff argues the 2012 SERP is funded because defendant HSM used insurance proceeds to pay benefits under the 2012 SERP and terminated the 2012 SERP when those proceeds became insufficient. However, the fact that defendant HSM used the life insurance proceeds to pay his benefits under the 2012 SERP does not establish that the 2012 SERP was a "funded" plan. Indeed, the employers in Demery, Belsky, and Reliable Home Health Care also used insurance proceeds to pay benefits, yet the court in those cases found the plans to be "unfunded" because the plan recipients did not have a right to the proceeds that was greater than that of an unsecured creditor. Likewise, here, the terms of the plan unequivocally establish that a 2012 SERP recipient's right to proceeds is not greater than that of an unsecured creditor, and defendant HSM's decision to terminate the 2012 SERP did not augment this right. Finally, the fact that defendant HSM created individual Rabbi trusts to hold the proceeds of each insurance policy does not alter the 2012 SERP's status as unfunded, where the trust documents indicated: 1) the trust did not affect the 2012 SERP's status as unfunded, 2) beneficiaries shall have no preferred claim to the trust assets, 3) the trust assets will be subject to creditors' claims in the event of insolvency. See In re IT Group, Inc., 448 F.3d 661, 669-670 (3d Cir. 2006) (finding a plan to be unfunded where the related Rabbi trust documents specified that the trust "shall not affect the status of the Plans as unfunded plans" and that "Trust assets are subject to creditors' claims in the event of insolvency, and that such claims are on par with those of Plan participants"); see also U.S. Dep't of Labor Opinion Letter 91-16A (July 2, 1991) ("[A] plan will not fail to be `unfunded' ... solely because there is maintained in connection with such plan a `Rabbi trust.'"). See Colburn v. Hickory Springs, No. 5:19-CV-139-FL, United States District Court, E.D. North Carolina, Western Division (2020), see: - https://scholar.google.com/scholar_case?case=1317766776274361048&hl=en&lr=lang_en&as_sdt=20006&as_vis=1&oi=scholaralrt&hist=bY5nDLcAAAAJ:17102308171145443235:AAGBfm2dXJvPo0nUQKlDLqIPUBXxyXMitw More below cause they might truncate me.

The focus of this excerpt relates only to ERISA qualified plans and was designed to address a potential Alternate Payee seeking to enforce a QDRO. But the definition of "beneficiary" is the same in the scenario you present, that is a employer sponsor of a health and welfare benefit plan. If you have the right to sue then you have the right to subpoena records. That does not, however, mean that you have to right to ask for records before suit has been filed and before a court has determined that you are in fact a "beneficiary" with standing to obtain records. As a practical matter the situation is likely the same with respect to a non-ERISA Plan. There are many plans that will not provide records without a subpoena signed by a judge. A subpoena signed by the Clerk of the Court will not do. The US Military will not provide such records unless the subpoena is signed by a Federal judge. See https://www.dfas.mil/foia/Subpoenas-Court-Orders/Subpoena-and-Court-Order-State/ and click on "Other Requestors". But in both cases you cannot get a subpoena without having a case pending before that court. In the case of the Military the workarounds are : (i) voluntary compliance by the Member; (ii) having the court hold the Member in contempt and imposing sanctions until the Member provides the requested information or authorizes the release of the information and documents to opposing counsel. A third option is to ask the court to assume that. since the Member will not cooperate, 100% of the Member's benefits are marital property and that the Former Spouse is entitled to 100% of such benefits --- so now the burden shifts to the Member to prove otherwise. A plaintiff has standing to bring a claim under ERISA if he/she is a plan participant, beneficiary, or fiduciary. Caples v. U.S. Foodservice, Inc., 444 F. App'x 49, 52 (5th Cir. 2011) (citing 29 U.S.C. § 1132(a)); Cobb, 461 F.3d at 634; Coleman v. Champion Int'l Corp., 992 F.2d 530, 533 (5th Cir. 1993). A "participant" under ERISA is an "employee or former employee" of an employer offering an employee benefit plan. 29 U.S.C. § 1002(7). A "fiduciary" is someone who (1) exercises "discretionary authority . . . respecting management of such plan or . . . disposition of its assets," (2) "renders investment advice for . . . compensation . . . with respect to any moneys or other property of such plan," or (3) "has any discretionary authority or . . . responsibility in the administration of such plan," Id. § 1002(21)(A). A "beneficiary" is defined as "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." Id. § 1002(8). In order to qualify as a beneficiary, an individual must have "a reasonable or colorable claim to benefits." Crawford v. Roane, 53 F.3d 750, 754 (6th Cir. 1995); see also Cobb, 461 F.3d at 635-36 (holding that to have standing as a beneficiary under ERISA, a plaintiff must show both that he or she was designated as such by the participant or terms of the plan, and that he or she has a colorable entitlement to benefits under the plan). In Parsons v. Board of Trustees of the Boilermaker-Blacksmith National Pension Trust, Civil Action No. 2:20-cv-00132, USDC (S.D. WV 2020), 487 F.Supp.3d 489 (2020), that you can find at - https://scholar.google.com/scholar_case?case=12166270204191846086&hl=en&lr=lang_en&as_sdt=20006&as_vis=1&oi=scholaralrt&hist=bY5nDLcAAAAJ:14880692104701005079:AAGBfm2qi1_JaXLJvydb4f3quYTnTlLkbA, the Court set forth a good summary of the rights of potential Alternate Payees to sue a pension plan for benefits claimed to be payable by reason of a QDRO. At issue in this case was whether or not the language of the QDRO was broad enough to include survivor annuity benefits. Said the Court - “ERISA was enacted to protect employees and their beneficiaries by ensuring the proper administration of employee benefit plans. Boggs v. Boggs, 520 U.S. 833, 839 (1997). The Retirement Equity Act of 1984 (REA) amended ERISA with respect to surviving spouses in two important ways. REA requires pension plans to provide automatic benefits to surviving spouses. Id. at 843; 29 U.S.C. § 1055(a). Additionally, while ERISA generally prohibits assignment or alienation of benefits under a pension plan, REA provides for a Qualified Domestic Relation Order (QDRO) exception wherein a former spouse or children of a previous marriage may be designated as an alternate payee and thereby "receive all or a portion of the benefits payable with respect to a participant under the plan." 29 U.S.C. § 1056(d)(3)(B)(i)(l). “A domestic relations order is any judgment, decree, or property settlement that "relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant" and "is made pursuant to a State domestic relations law." Id. at § 1056(d)(3)(B)(ii). However, in order for a domestic relations order to qualify as a QDRO, it must meet the following requirements: (1) the order must specify the name and mailing address of the alternate payee and the affected plan participant, (2) the amount or percentage of the participant's benefits to be paid or the means by which that amount will be determined, (3) the number of payments or time period to which the order applies, and (4) each plan to which the order applies. Id. at § 1056(d)(3)(C). Moreover, a QDRO cannot (1) require the plan to provide any type of benefit not otherwise provided, (2) require the plan to provide increased benefits, or (3) require benefits to be paid to an alternate payee which must be paid to another alternate payee under the QDRO. Id. at § 1056(d)(3)(D). “A plan administrator generally has discretion to determine whether a domestic relations order constitutes a QDRO, but such determinations are reviewable by courts. Dorn v. Int'l Bhd. of Elec. Workers, 211 F.3d 938, 946 (5th Cir. 2000). In determining whether a domestic relations order is a QDRO, courts have required substantial compliance with the drafting requirements. Hamilton v. Washington State Plumbing & Pipefitting Indus. Pension Plan, 433 F.3d 1091, 1097 (9th Cir. 2006). The "pivotal question is whether the dissolution order `clearly contains the information specified in the statute that a plan administrator would need to make an informed decision.'" Id. (quoting Stewart v. Thorpe Holding Co. Profit Sharing Plan, 207 F.3d 1143, 1154 (9th Cir. 2000)). “If a domestic relations order qualifies as a QDRO, then "any spouse, former spouse, child, or other dependent of a participant" that is designated as an alternate payee shall be considered a "beneficiary under the plan." Id. at §§ 1056(d)(3)(J)-(K). Thereby, a former spouse can obtain a secured interest in benefits merely by obtaining a QDRO. Id. at 1056(d)(3)(A); Metro. Life Ins. Co. v. Pettit, 164 F.3d 857, 864 (4th Cir. 1998); Hopkins v. AT&T Global Info. Solutions Co., 105 F.3d 153, 157 (4th Cir. 1997). “As noted above, ERISA requires pension plans to provide automatic survivor benefits to retiring participants. Dorn, 211 F.3d at 943. A Qualified Q Annuity (QJ&SA) is the principal mechanism for providing such survivor benefits. Id. "[A] QJ&SA comprises two separate and distinct benefits: (1) An annuity for the life of the participant, and (2) a succeeding annuity for the life of the surviving spouse (if there is one) of not less than 50% of the participant annuity." Id. Generally, in order for one to qualify as a surviving spouse in the context of a QJ&SA they must be married to the participant "(1) during the applicable election period, (2) on the annuity starting date, or (3) at [the participant's] death." Id. at 947 (internal quotation marks omitted). “Former spouses, however, can also receive surviving spouse benefits under certain circumstances. "To the extent provided in any qualified domestic relations order ... the former spouse of a participant shall be treated as a surviving spouse of such participant." 29 U.S.C. § 1056(d)(3)(F)(i) (emphasis added). Federal courts have held that, in order for a former spouse to be entitled to surviving spouse rights, "any assignment of surviving spouse rights in a QDRO must be explicit, rather than implicit." Hamilton, 433 F.3d at 1099; Hopkins, 105 F.3d at 155; Dorn, 211 F.3d at 947. Moreover, where a QDRO is silent as to surviving spouse rights, a designation of alternate payee or beneficiary does not elevate one to the status of a surviving spouse entitled to a survivor annuity under a QJ&SA. Dorn, 211 F.3d at 947. “The detailed requirements for drafting a QDRO have been characterized as a "drafting morass for the lawyer." Hamilton, 433 F.3d at 1096. The Court recognizes "the concern expressed by courts and commentators that the failure of domestic relations lawyers to `navigate the treacherous shoals' of ERISA may harm potential beneficiaries." Id. (quoting Metro. Life Ins. Co. v. Wheaton, 42 F.3d 1080 (7th Cir. 1994)). Nevertheless, "Congress required that QDROs be specific and clear because it was concerned with reducing the expense to plan providers and protecting them from suits for making improper payments." Id. at 1096-97 (quoting In re Gendreau, 122 F.3d 815, 817-18 (9th Cir. 1997)) (internal quotation marks omitted). "As an initial matter, the Plaintiff argues that the Court should not consider the QDRO or the Plan Document, because review of such documents is premature at the motion to dismiss stage and would instead convert this motion into one for summary judgment. This argument is without merit. For purposes of a motion to dismiss, "a court may consider official public records, documents central to the plaintiff's claim, and documents sufficiently referred to in the complaint so long as the authenticity of these documents is not disputed." Witthohn v. Fed. Ins. Co., 164 Fed. Appx. 395, 396 (4th Cir. 2006). A court may also consider pension plan documents for a motion to dismiss when a plaintiff relies on such documents in the complaint. Stewart v. Pension Trust of Bethlehem Steel Corp., 12 Fed. Appx. 174, 176 (4th Cir. 2001). Both the QDRO and the Plan Document fall under this umbrella and may be considered in light of the motion to dismiss.” ERISA § 404(a)(1) sets forth the primary duties of an ERISA fiduciary, providing that a fiduciary must: (1) act solely in the interest of plan participants and beneficiaries for the exclusive purpose of providing benefits to participants and their beneficiaries; (2) act with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims; (3) diversify the investments of a plan so as to minimize the risk of large losses; and (4) act in accordance with the documents and instruments governing the plan insofar as they are consistent with the provisions of Titles I and IV of ERISA. 29 U.S.C. § 1104. A fiduciary may be personally liable for, and removed as a fiduciary as a result of, any breaches of the responsibilities, obligations, and duties imposed by the statute while acting as a fiduciary under ERISA. ERISA § 409. 29 U.S.C. § 1109. Generally, to state a claim for breach of fiduciary duty under ERISA, a plaintiff must allege that: (1) the defendant was a fiduciary of an ERISA plan who, (2) acting within his capacity as a fiduciary, (3) engaged in conduct constituting a breach of his fiduciary duty. A good case discussing breach of fiduciary duty is Volz v. General Motors, Civil Action No. 22-cv-3471, United States District Court, E.D. Pennsylvania (October 5, 2023)- https://scholar.google.com/scholar_case?case=10217039916663686201&hl=en&lr=lang_en&as_sdt=20006&as_vis=1&oi=scholaralrt&hist=bY5nDLcAAAAJ:17102308171145443235:AFWwaea94w7XgMVkZLP-Q4RdIOLK&html=&pos=1&folt=kw See also, 29 U.S.C. § 1104(a)(1) (duty of loyalty) and 29 U.S.C. § 1104(a)(1)(B) (duty of prudence). See Barker v. Am. Mobil Power Corp., 64 F.3d 1397, 1403 (9th Cir. 1995) (ERISA's duty to act in the best interests of the plan participants and beneficiaries includes a duty to investigate suspicions that one has concerning the plan); see also Patterson v. Reliance Standard Life Ins. Co., 986 F. Supp. 2d 1140, 1150 (C.D. Cal. 2013). See cases citing Barker at - https://scholar.google.com/scholar?hl=en&as_sdt=20000006&q="Barker+v.+Am.+Mobil+Power+Corp."+"64+F.3d+1397"+"duty"+"investigate"+'"fiduciary"&btnG= Good luck, David

Peter and QDROphile: Yes, I have received model QDROs from a dozen ESOP administrators. But none address the allocation of unvested shares awarded/deposited into the trust during the marriage that will not vest until after the divorce. In Maryland, if we were talking about unvested stock options or non-qualified deferred compensation plans (neither of which are enforceable by a QDRO) the non-vested portion would be allocated by the parties or by the court as follows: “If, as and when the Participant’s unvested ESOP shares vest, the Plan with transfer to the Alternate Payee a sum computed by taking the value of newly vested stock computed [N.B. once a year valuation is another issue that was not addressed in https://www.congress.gov/bill/119th-congress/senate-bill/2403/text] and multiply the amount thus obtained by a fraction, the numerator of which is equal to the number of whole months of the Participant’s employment from the date of the grant of the aforesaid unvested stock until the date of entry of the Judgment of Absolute Divorce, and the denominator of which is equal to the number of whole months of the Participant’s employment from the date of the grant of the aforesaid unvested stock until the date of vesting of such unvested stock.” This may be a tempest in a teapot since vesting will occur within 6 years and that means that the duration of the marriage will be rather short and the amount in the trust, vested or not, may be meager - but maybe not. Under Section 415 of the Internal Revenue Code, yearly allocations ("annual additions") to individual employee accounts for the ESOP and any other defined contribution plan, such as a 401(k), cannot exceed the lesser of 100% of their compensation or a dollar limit that is indexed for inflation ($72,000 as of 2026). I have seen divorcing couples fight over, and the court order the preparation of a QDRO to transfer, as little as $5,000. I am working on a Memo and will send that along when it's ready for prime time, maybe today. It's titled "ESOP V. STOCK OPTION PLANS, VALUATION, VESTING, INTERPOLATION, QDROS, AGREEMENTS, MONETARY AWARDS"....a real page turner sure to win the Pulitzer. David

Is anyone willing to send me a copy of a model ESOP QDRO? In Maryland where I practice the law with respect to vested and non-vested 401(a) benefits seem to be an out of step with the manner in which ESOP Administrators are willing the alocate the benefits to the Alternate Payee. My email is marylandmediator@gmail.com Thanks. David

Is anyone willing to send me a copy of a model ESOP QDRO? In Maryland where I practice the law with respect to vested and non-vested 401(a) benefits seem to be an out of step with the manner in which ESOP Administrators are willing the alocate the benefits to the Alternate Payee. My email is marylandmediator@gmail.com Thanks. David

Thanks for the good wishes. I have atoned for my sin and have a clean slate going forward. Thanks also for the time you spent responding to my questions. My concern about ERISA qualified defined contribution Plans that are morphing into defined benefit plans thanks to SECURE has been generated by dealing with TSP distribution options. See attached TSP booklet "Distributions" at pages 3, 4, and 5 and page 10 were it says: "Spouses’ Rights The Federal Employees’ Retirement System Act of 1986, which created the TSP, provides certain rights to spouses of participants. These rules do not apply to beneficiary participants. If you are a married FERS, CSRS, or uniformed services participant (even if you are separated from your spouse), you are subject to certain spouses’ rights requirements, as explained below. • "If you are a married FERS or uniformed services participant with a total TSP account balance of more than $3,500, your spouse is entitled by law to a prescribed survivor annuity. This is a joint life annuity with a 50% survivor benefit, level payments, and no cash refund feature. If you choose any other annuity or any other distribution option, your spouse must provide signed (electronic or paper) consent for the distribution to be processed. This is also true if you request a change in the amount or frequency of installments since this could affect the amount available for an annuity." And see the attached memo re: TSP annuities now offered by MetLife, where it says: "Annuity purchases are irrevocable; changes cannot be made once an annuity is purchased." And see https://www.annuity.org/annuities/types/tsp-annuity/ The Alternate Payees I work with want immediate lump sum payouts from defined contribution plans either via a tax free rollover to an IRA or other eligible retirement account, or a taxable distribution, but no 10% penalty regardless of their age. Their ex-spouse Participants are happy to slow that process by stretching out the payments and hoping to save money on the back end. My bottom line questions are: 1. whether the spouse of a Participant in an ERISA qualified defined contribution Plan is entitled to notice and/or must consent to an election that the Participant may make: (i) for an QLAC pursuant to SECURE that provides a 50% QJSA [thereby allowing the Participant to make his ex-wife wait for her payout in installments rather than an immediate lump sum]; and (ii) for any other form of annuitized payout similar to those offered by TSP similar to a 50% QJSA. 2. whether there is any way that a court can enter a QDRO that will supersede an election made by a Participant prior to the divorce. Judges don't understand or respect Federal preemption. They ignore me when I tell them that no matter what the parties may have set forth in their Marital Settlement Agreement and no matter what the Judge may have set forth in the Judgment of Divorce or in a QDRO, the Plan is not going to do anything that would violate ERISA, REA, PPA, IRC, DoL Regs or its Plan Documents and will tell the Judge what to put in his/her hat. I gather from your comments that some annuitized plans might restrict payments to an Alternate Payee via the "age 50 rule". I am dealing with one now - the Steamfitters Local Union No. 602 Retirement Savings Plan, a union plan, that rejected my draft QDRO providing for an immediate lump sum payout and stated: "An Alternate Payee may receive a benefit only when permitted under the terms of the Plan of Benefits and applicable law. The Plan of Benefits permits an Alternate Payee to receive her benefit, upon written application, when the participant becomes eligible to receive benefits or attains, or would have attained, age 50." I had a case a few years ago where Deloitte required adherence to the age 50 rule to a separate interest defined benefit plan. And other accounting and legal firm seem to like the age 50 rule applied to Keogh Plans. I gather from your comments that the finality baked in the TSP/MetLife annuities might have not exist in ERISA Plan where flexible options unique to such a Plan would require spousal consent. A further problem is that nobody is going to pay me for my time in reading and trying to understand the Plan Documents and the annuity contract (without benefit of your expertise) in order to prepare a proper QDRO. My experience with in-house Plan Administrators and TPAs and Recordkeepers is that they don't know what provisions are in the Plan Documents or even in the SPD, nor do their attorneys. I have another motive, a Google Groups listserv with about 1450 members, mostly family lawyers, that I created in 2011 and still moderate. I spend a great deal of time trying to save my colleague from malpractice. It is my understanding the the SECURE acts were enacted without any consideration of the allocation of retirement benefits between divorcing spouses. I am reminded of Gelschus v. Hogen and Honeywell International Inc., 47 F.4th 679, 685 (8th Cir. 2022) the facts were as follows: https://scholar.google.com/scholar_case?case=17943187857086039477&q=Gelschus+v.+Hogen&hl=en&as_sdt=4,21,85,87,92,97,113,128,148,150,155,160,256,257,273,274,284,285,319,320,336,337,347,348,382&as_ylo=2017&as_yhi=2025 Sally A. Hogen made contributions to a 401(k) plan during her employment at Honeywell International Inc. She originally designated her husband, Clifford C. Hogen, as the sole beneficiary in the event of her death. Sally and Clifford divorced in 2002. In the marital termination agreement (MTA), they agreed that "[Sally] will be awarded, free and clear of any claim on the part of [Clifford], all of the parties' right, title, and interest in and to the [her] Honeywell 401(k) Savings and Ownership Plan." In 2008, Sally submitted a change-of-beneficiary form to Honeywell. She, however, did not comply with a Plan requirement. She allocated "33-1/3%" of the 401(k) benefits to each of her siblings. The instructions said, "The Allocation % must be by whole percentages." Because she did not use whole percentages, Honeywell did not change her designation. Honeywell called Sally and left a message notifying her of the rejection. Honeywell also sent eleven annual statements showing Clifford as the sole beneficiary. She took no further action. Sally died in 2019, with nearly $600,000 in her 401(k) plan. Honeywell paid the benefits to Clifford. Robert F. Gelschus, as personal representative of Sally's estate, sued Honeywell for breach of fiduciary duty, and Clifford for breach of contract, unjust enrichment, conversion, and civil theft. Clifford kept the money. TSP Distributions.pdfTSP Annuities MetLife.pdf From one of the greatest movies ever made:

It is now September 18, 2026. 26 CFR §1.401(a)(9)-6(q)(3)(vii)(C) - https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR6f8c3724b50e44d/section-1.401(a)(9)-6 states: “(vii) Treatment of former spouses — (A) In general. The payment of survivor benefits to the employee's former spouse under an annuity contract will not cause the contract to fail to satisfy the requirements of this paragraph (q)(3) merely because the divorce between the employee and that former spouse occurred after the contract is purchased, provided that a qualified domestic relations order described in section 414(p) (or, to the extent provided in paragraph (q)(3)(vii)(B) of this section, a divorce or separation instrument) satisfying the requirements of paragraph (q)(3)(vii)(C) of this section has been issued in connection with the divorce. (B) [Reserved] (C) Applicable requirements. This paragraph (q)(3)(vii)(C) is satisfied if the qualified domestic relations order (or divorce or separation instrument) issued in connection with the divorce— (1) Provides that the former spouse is entitled to the survivor benefits under the contract; (2) Provides that the former spouse is treated as a surviving spouse for purposes of the contract; (3) Does not modify the treatment of the former spouse as the beneficiary under the contract who is entitled to the survivor benefits; or (4) Does not modify the treatment of the former spouse as the measuring life for the survivor benefits under the contract.” My issues are the same. Facts: John and Mary are married. Mary is guilty of adultery and John is planning to file for divorce. He wants to convert his 401(k) Plan to a QLAC. He concludes that a QLAC distribution that allows him to delay his RMDs is a better option than having the Court award Mary an immediate lump sum following the entry of the Judgment of Divorce. John is concerned that if Mary gets a lump sum and dies after she has married her paramour, her share of John's 401(k) will pass to her paramour. John walks into the Plan Administrator's office and asks, "Do I need to give notice to Mary and/or have her consent my contemplated purchase of a QLAC?" The answer should be "no" since the QLAC will be in the form of a 50% QJSA where spousal consent is not required. Correct me if I am mistaken. If the Plan Administrator's answer is that spousal consent is not required, the second question (from my Benefitslink blog) is whether at the time of a future divorce a state Court can enter a QDRO that will supersede and thereby void the election of the QLAC and award Mary an immediate lump sum? What is John retires and rolls his 401(k) into an IRA. Are the answers above the same for IRA accounts? I hope you can help. This is the real world for my clients. Thanks, David

One more question directed to Effen. Assume that my divorce client, the husband, has $200,000 in his 401(K) Plan account. In order to avoid giving his wife an immediate lump sum payment of $100,000 he decides to purchase a QLAC (perhaps expecting that she will predecease him). Pursuant to Federal law his wife must me named as an Alternate Payee of a 50%QJSA. For purposes of this example we have to assume that a QDRO will not supersede a QLAC already in place. We don't know for sure. And we must also assume that the former spouse must be given notice to and must consent to the purchase of the QDAC. We don't know that for sure. You are asked to determine the present value of that QJSA (but you cannot look at the 401(k) statement that sets forth the present value as of the date of that statement - $200,000). Will the actuarial assumptions result in a PV of $200,000? David

It is my understanding that if you have a vested balance of $100,000 in your 401(k) and you borrow $50,000, then you still have a vested balance of $100,000 in your 401(k) but it is subject to a loan of $50,000. The periodic statements I have seen reflect the foregoing. So that would leave the remaining $50,000 for a hardship distribution. 26 CFR § 1.72(p)-1 - Loans treated as distributions at https://www.law.cornell.edu/cfr/text/26/1.72(p)-1 provides at Question 3: "Q-3: What requirements must be satisfied in order for a loan to a participant or beneficiary from a qualified employer plan not to be a deemed distribution? A-3: (a) In general. A loan to a participant or beneficiary from a qualified employer plan will not be a deemed distribution to the participant or beneficiary if the loan satisfies the repayment term requirement of section 72(p)(2)(B), the level amortization requirement of section 72(p)(2)(C), and the enforceable agreement requirement of paragraph (b) of this Q&A-3, but only to the extent the loan satisfies the amount limitations of section 72(p)(2)(A)." Logic compels the conclusion that the amount borrowed does not reduce the vested balance unless and until it is not repaid in which event it becomes a "distribution" that would reduce the vested balance. David

was Effen's response to my comment that, "Since I know for certain that lump sum payments are most often less than the actuarially determined present value of a future stream of income (most often by the selection of out of date mortality tables). I live in a world where divorcing couples are dividing pension and retirement benefits and often need to know the present value of retirement and survivor annuity benefits. I refer my client to a well regarded actuary even though I always disagree with his conclusions. The source of my angst is that so much of the information he uses to make such a valuation is speculative. In my humble opinion, the following is a list of important factors interspersed with the assumptions what he wants to make. (i) the gender, age and life expectancy of the Participant; [Male and female tables are okay, but not unisex data] (ii) the gender, age and life expectancy of the Alternate Payee; [Male and female tables are okay, but not unisex data] (iii) whether the mortality tables used to compute life expectancies are reliable if one or both parties has a medical history of, e.g., 3 heart attacks or cancer; [My first pension PV case in 1984 involved a 56 years old client with a history of 3 heart attacks. His soon to be ex-wife wanted a lump sum payout rather than an if, as and when payout at the time of his retirement. Her actuary valued my client's pension at $650,000. In response to my cross examination he admitted that the mortality tables he was using were designed for the "generic man" and did not in fact apply to my client. My law partner at the time was a Maryland State Senator who sponsored a bill that changed the Maryland Code to provide that "if, as and when" is the default form of payout, not a "lump sum" except in limited circumstances. That is now the law of Maryland.] (iv) the age of the Participant when he/she elects to retire; (v) the amount of the Participant’s retirement benefits from which the amount of survivor annuity benefits is computed [See comments below re: actuarial equivalence per 29 U.S.C. §§ 1055(d)(1)(B) and (d)(2)(A)(ii)]; (vi) the Federal and state marginal income tax rates applicable to the future payment of retirement and survivor annuity benefits to the Alternate Payee; (vii) the COLA rates applicable to the retirement annuity benefit from and after divorce to the date the Participant retires and thereafter applicable to the survivor annuity until the Alternate Payee’s death; (viii) the applicable discount rate required to compute the present value of the future stream of retirement and survivor annuity benefits - PBGC ERISA 1044 Yield Curves or the GATT rate - monthly average of the 30-year Treasury yield rate. (ix) the number of busses passing the Participant’s house every day what might run him over before his time render meaningless all of these calculations; and (x) the willingness of the Judge to conclude that the number of speculative "facts" make it impossible to come up with a reliable present value. But there is more. It is disconcerting to see so many cases where actuaries employed by Plan Administrators will not hesitate to use out of date mortality tables and discount rates to manipulate actuarial equivalence in a way that favors the plan. See attached articles. The attached Kellogg Complaint explains it better than I can. So you will understand that I am not able to accept your assertion that, "The lump sum is exactly the present value of a future stream of income" when the truth is that actuaries have made it appear so. Actuarial Equivalence-Daniel Aronowitz-5-14-24.pdfMercer Update May 4, 2026.pdfKellogg-Complaint_092023.pdfLegal Update _ Sixth Circuit, Missouri District Court Differ as to Whether ERISA Requires Updated Mortality Tables _ Husch Blackwell.pdfActuarial Equivalence - Trucker Huss April 30 -2026.pdf David

Effen: You said that, "When the plan is purchasing an annuity under this situation, or in a derisking move that doesn't involve a plan termination, [DSG: But it does in this case.] the annuity purchased must provide all the same rights and features of the plan document. Therefore, the annuity purchase is not a distribution to the participant. The participant is not involved in the purchase." It is my understanding that "derisking" is what happens when the Plan pays out an immediate lump sum to avoid the potential cost of a future annuity payout that may exceed the amount of the lump sum and thereby reduce the risk of a larger payout. Those risks include the longevity risk, investment risk, and interest rate risk. See https://actuary.org/pension-risk-transfer/ What you are suggesting is that a transfer of the Plan's annuity payout risk to an insurance carrier is a form of derisking. I can see the logic of that. But we seem to be concluding that lump sum payout is at least a form of derisking but that the plan is not terminating ,which it certainly is, and that due to some law or regulation as yet undiscovered the spouse must consent to the lump sum but not the derisking act of buying an annuity. Since I know for certain that lump sum payments are most often less than the actuarially determined present value of a future stream of income (most often by the selection of out of date mortality tables). And wouldn't it make a difference if the Participant has or has not reached earliest or normal retirement age or is or is not in pay status? I don't claim to be an expert in this area. That's why I look for enlightenment and illumination from you fine folks. I vividly recall my first day in statistics 101 at college where the professor told us about the statistician (or actuary) who, when offered to buy a watch that lost one second a day or a watch that didn't run at all, opted for the latter because statistically the watch that didn't run at all was accurate twice a day and the watch that lost one second a day was only accurate once every 17 years. Then there was the story of the statistician who refused to parachute from a burning airplane since statistically flying is safer than parachuting. And, of course, the statistician believes that if you put your left foot in boiling water and your right foot in ice water, on the average you are comfortable. David

A little research shows at the survivor annuity in a J&S annuity does not have to be spouse of the first annuitant. [Or does that not apply to PBGC terminations?] Everyone seems to agree that for PBGC termination purposes a J&S annuity is not a "distribution" for spousal consent purposes. If that is case, what protection is provided to the spouse in pixiebear's fact pattern if the annuitant chooses, for example, his sister and not his wife as the 2nd annuitant? The PBGC Q&A page states: "A rollover of an amount exceeding a plan's de minimis cash-out level is subject to spousal consent regardless of whether the participant wants the lump sum to be rolled over into another plan or IRA or paid directly by check or direct deposit." It does not mention J&S annuity payouts. 29 CFR Subpart 4041 - https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XL/subchapter-E/part-4041/subpart-B?toc=1 29 CFR Subpart 4041, Section 4041.21(b)(2) - https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XL/subchapter-E/part-4041/subpart-B/section-4041.21 states that: "(2) Alternative treatment of majority owner's benefit. A majority owner may elect to forgo receipt of his or her plan benefits to the extent necessary to enable the plan to satisfy all other plan benefits in accordance with § 4041.28. Any such alternative treatment of the majority owner's plan benefits is valid only if— (i) The majority owner's election is in writing; (ii) In any case in which the plan would require the spouse of the majority owner to consent to distribution of the majority owner's receipt of his or her plan benefits in a form other than a qualified joint and survivor annuity, the spouse consents in writing to the election; (iii) The majority owner makes the election and the spouse consents during the time period beginning with the date of issuance of the first notice of intent to terminate and ending with the date of the last distribution; (iv) Neither the majority owner's election nor the spouse's consent is inconsistent with a qualified domestic relations order (as defined in section 206(d)(3) of ERISA); and" (Emphasis supplied.) Is the Participant in pixiebear's scenario the "majority owner"? If not, it looks like spousal consent may not be required at all. But I would not risk being sued for legal malpractice, or for breach of fiduciary duty if I was the Plan Administrator, without finding all of the applicable Code provisions and regulations. The road to hell is paved with assumptions and crossed fingers. David

EFFEN: Can you cite me the law or CFR regs that provides that "spousal consent is not required for an annuity purchase". Thanks.

Try MetLife. They set up annuities for TSP plan participants. See attached.TSP Annuities MetLife.pdf The language on the PBGC website states: "A rollover of an amount exceeding a plan's de minimis cash-out level is subject to spousal consent regardless of whether the participant wants the lump sum to be rolled over into another plan or IRA or paid directly by check or direct deposit." One would expect that the purchase of an annuity would also require spousal consent. See 29 CFR 4022.8(c)(3) at - https://www.law.cornell.edu/cfr/text/29/4022.8 What happens if the Participant in your case cannot get his wife to consent? He can always file for divorce and transfer her share via a QDRO David

Might I point out that a D/C loan is NOT a loan at all. The Participant is borrowing from himself and is repaying himself with interest. The interest goes directly back into the Participant's account. See https://www.fidelity.com/viewpoints/financial-basics/taking-money-from-401k It is not like taking out a loan from a bank where you have someone else's money. A D/C loan is akin to taking $20 from the cookie jar on Monday and putting $21 back into the cookie jar on the following Monday. Unless you have some authority, please don't tell me that a D/C loan comes from the "Plan" that holds the accounts of all of the Participants and that there are no individual accounts for each Participant. Every Participant has a vested interest in the plan - just like a partnership, notwithstanding that all of the assets and liabilities of the partnership are in the name of the partnership and not in the separate names of each partner. See https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-vesting “Vesting” in a retirement plan means ownership. This means that each employee will vest, or own, a certain percentage of their account in the plan each year. An employee who is 100% vested in his or her account balance owns 100% of it and the employer cannot forfeit, or take it back, for any reason." David

See https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2023-instructions.pdf and https://wrangle5500.com/form-5500-errors-dol-audit/ The penalty for a typo of the type (pun intended) with which you are dealing is ..... https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcSvGdNyaLvTt4L4Un7XBc-Hd1WusD0wyeMXNUWiJfPjPQ&s=10

I assume you are concerned with how the Plan operates, and not whether or not the Plan must adhere to the registration, tax, criminal, etc. laws of the State(s) in which it operates. If I am correct, once you can conclude that ERISA does not preempt state law you are halfway home. I have never met a Plan that was not created by either Federal, state, county, city, municipal, town, International law or the law of some other governmental entity. I am asked to prepare QDROs with respect to Plans created overseas who are required to accept a QDRO that would be acceptable if the Plan was a US Plan. . The HOA for the subdivision where I live has a 401(k) for it's employees (swimming pool,clubhouse and grass cutting) and they use a pro forma ERISA document. Our Montgomery County, Maryland, Police and Firefighters Pension Plan is set forth in detail in the County Code, and does not provide QJSA or QPSA to former spouses unless the cop/firefighter retired before divorce and elected survivor benefits in which event the election survives the divorce. Public school teachers in Montgomery County participate in a State Pension Plan, a County Supplemental Pension Plan, and can opt into a ERISA 401(k), 403(b) or 457(b). The state of Maryland has 12 pension plan and another on the way all governed by Maryland Statutes and regulations. See https://sra.maryland.gov/members/benefit-handbooks/ The Prince Georges County Crossing Guards and the Washington County Free Library operate under the Maryland State Retirement and Pension System and the Maryland Code of Maryland Regulations (COMAR) - https://regs.maryland.gov/us/md/exec/comar/22. Unions and Church sponsored facilities make up pension and retirement plans what routine demonstrate no understanding of the difference between the shared interest allocation and the separate interest allocation of pension benefits. And every one of those plans will say something like,"This Pension/Retirement Plan hall be read, interpreted and enforced in accordance with the "State Personnel and Pensions Article of the Annotated Code of Maryland and Title 22 of the Code of Maryland Regulations". The first thing we learned in law school about corporations was that they were very likely to be incorporated in Delaware for three reasons: (i) Delaware law was very favorable to whatever it is that Corporations want to as its governing Articles of Incorporation; (ii) Delaware has accumulated a very well regarded body of Corporate law; and, (iii) low or no corporate taxes. But that has nothing to do with the law governing the retirement and welfare plans they will adopt and sponsor under ERISA, or by "The Doghouse" - best steak sub anywhere in I-95 between DC and NYC - under the law of the State of Delaware or New Castle County or Historic New Castle City. https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcS6mizFCOrCEVjW0DXrfGo0f9uXzvGGA4JthwjHpnWSjg&s In order to understand your issue I would need to know the issue. I cannot imagine that any Plan can be created without being approved by IRS in order to provide the umbrella for deferred taxability. And I don't think it matter who the TPA or Recordkeeper is. David

Bri: I don't recall reading anything in metsfan026's post suggesting that the loan was in default. How are you defining "default"? What does it mean when a plan "terminates"? Are there DoL regulations setting forth the steps in the process, and is the timing or the protocol set forth in the Plan Documents? I am pretty sure that the account balances survive the "termination". They don't disappear...poff....do they? Or are the account balances immediately distributable as taxable income to each Participant? No? I wouldn't think so. Do the Participants have a time frame within a rollover can be made to the Participant's IRA or other eligible retirement account? Or to elect a taxable distribution? Doesn't a Participant with an outstanding loan balance have until payments are due to make the payment...or payments that may stretch into the future? I would think so. Or does the "termination" automatically accelerate all of the loan payments due? I read these posts in the hope of reaching enlightenment with respect to the administration of ERISA plans. Why? Because my legal involves the preparation of QDROs for divorcing couples and the amount of outstanding loans can impact the amount available to pay the Alternate Payee the amount or percentage awarded to her. In 40 years of preparing QDROs I have never had to consider Plan termination as a factor that I needed to address in the QDROs I prepare or as a factor for the parties should consider in drafting their Marital Settlement Agreement or that the Court should address in the Judgment of Absolute Divorce. Do I need to add, e.g. "In the event that the Plan shall terminate prior to full payments of the amount awarded to the Alternate Payee in this QDRO it shall be conclusive be presumed that all outstanding loans have been or will be paid in full by the Participant prior to computing the amount payable to the Alternate Payee." I found this article, but it doesn't deal with outstanding loans the Plan termination. https://www.milliman.com/en/insight/pension-plan-data-plan-termination-clean Aspects of this issue were addressed on BL in June, 2024 at - And I just discovered https://www.dol.gov/node/25154 where the DoL says: "In drafting orders dividing benefits under defined contribution plans, parties should also consider addressing the possibility of contingencies occurring that may affect the account balance (and therefore the alternate payee's share) during the determination period. For example, parties might be well advised to specify the source of the alternate payee's share of a participant's account that is invested in multiple investments because there may be different methods of determining how to derive the alternate payee's share that would affect the value of that share. The parties should also consider how to allocate any income or losses attributable to the participant's account that may accrue during the determination period. If an order allocates a specific dollar amount rather than a percentage to an alternate payee as a shared payment, the order should address the possibility that the participant's account balance or individual payments might be less than the specified dollar amount when actually paid out. Reference: ERISA §§ 206(d)(3)(C); IRC § 414(p)(2)" But no explicit mention of plan termination. David

Expert with respect to what? The applicable law? Construction of a nuclear submarine? Diagnosis of PTSD? It matters.

You began by saying this was to be a shared interest allocation of benefits. You then ask about determining a separate interest. And NOBODY noticed? Just to be clear with respect to shared...... The alternate payee's portion of the participant's defined benefit plan cannot be determining until the participant retires. The formula for a shared interest is, for example: "The alternate payee shall be entitled to receive as her share of the participant's retirement annuity benefit, an amount computed by taking fifty percent (50%) of the unreduced* amount of each monthly payment, if, as and when payable to the participant, multiplied by a fraction, the numerator of which is the number of months during the marriage of the parties that the participant accrued creditable service toward retirement, and the denominator of which is the total number of months of creditable service accrued by the participant at the time of the participant's entry into pay status." *by the actuarial reduction in the retirement annuity required to fund survivor annuity benefits for the alternate payee Computing the alternate payee's share prior to the time set forth above may be interesting, but has no practical use. The parties normally have the power to AGREE to change from and shared to a separate interest allocation, especially when the parties or their attorneys for the trial court have failed to properly articulate the proper formula for a shared interest allocation. Note that I did not mention pre- and post-retirement survivor annuity benefits except at * above. Separate interest allocations don't have survivor annuity benefits. If the Plan Administrator ("PA") has "actual notice" of the pendency of a QDRO and acts contrary to that information, then the PA has breached his/her/its fiduciary duty to both the participant and the alternate payee. Refer them to me and I will be happy to sue in U.S. District Court for damages and my legal fees and expert witness fees. Attached is a Memo re: shared v. separate. Shared v. Separate - 12-31-2024.pdf David

I admit to being smothered by all of this. I don't understand how the Participant can FAIL to make full repayment in 5 years. Logic, (in my world), would be that at the end of 5 years the balance due would automatically become a taxable distribution - and done. Does the Plan Administrator have any duty to notify the Participant that the payment is coming due, or that the abyss is in sight, or of the adverse financial consequences what are on the horizon? My interest in this matter is that I handle divorce mediation and the preparation of QDROs (and similar documents transferring retirement benefits between divorcing parties). The parties are ALWAYS in financial distress. The borrow from their 401(k) plans, they take hardship distributions, they even quit their jobs so they can take post termination distributions in excess of the 50%/$50,000 loan limits. They explore the possibility of SECURE alternatives what would allow immediate in-service annuity payouts. They want to pay for the kid's braces, pay off credit card balances, pre-pay college expenses, cover legal fees and court costs.

DAVID D. Can you cite me some authority for your comment? Thanks,

It's not really a loan like you would make from a bank. The Participant has borrowed his own money, pays himself back, pays interest to himself. Just because the source is the entire plan account doesn't change that reality. Make a taxable distribution to the Participant and the "loan" will be paid off in full .