fmsinc

While it is not the job of a Plan Administrator to look behind the QDRO presented to them, read the two Advisory Opinions attached. In 1999-13A the author begins as follows: "This is in response to your request on behalf of the UAL Corporation (UAL) and United Air Lines, Inc. (United) for an advisory opinion. Specifically, you ask how a plan administrator should treat domestic relations orders the plan administrator has reason to believe are "sham" or "questionable in nature." Later on the Opinion continues: "You have asked for an advisory opinion as to whether, and if so when, a plan administrator may investigate or question a domestic relations order submitted for review to determine whether it is a valid “domestic relations order” under State law for purposes of section 206(d)(3)(B) of ERISA." The response was as follows inter alia: "When a pension plan receives an order requiring that all or a part of the benefits payable with respect to a participant be paid to an alternate payee, the plan administrator must determine that the judgment, decree or order is a “domestic relations order” within the meaning of section 206(d)(3)(B)(ii) of ERISA — i.e., that it relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child or other dependent of the participant and that it is made pursuant to State domestic relations law by a State authority with jurisdiction over such matters. Additionally, the plan administrator must determine that the order is qualified under the requirements of section 206(d)(3) of ERISA. It is the view of the Department that the plan administrator is not required by section 206(d)(3) or any other provision of Title I to review the correctness of a determination by a competent State authority pursuant to State domestic relations law that the parties are entitled to a judgment of divorce. See Advisory Opinion 92-17A (Aug. 21, 1992). Nevertheless, a plan administrator who has received a document purporting to be a domestic relations order must carry out his or her responsibilities under section 206(d)(3) in a manner consistent with the general fiduciary duties in part 4 of title I of ERISA." "For example, if the plan administrator has received evidence calling into question the validity of an order relating to marital property rights under State domestic relations law, the plan administrator is not free to ignore that information. Information indicating that an order was fraudulently obtained calls into question whether the order was issued pursuant to State domestic relations law, and therefore whether the order is a “domestic relations order” under section 206(d)(3)(C). When made aware of such evidence, the administrator must take reasonable steps to determine its credibility. If the administrator determines that the evidence is credible, the administrator must decide how best to resolve the question of the validity of the order without inappropriately spending plan assets or inappropriately involving the plan in the State domestic relations proceeding. The appropriate course of action will depend on the actual facts and circumstances of the particular case and may vary depending on the fiduciary’s exercise of discretion. However, in these circumstances, we note that appropriate action could include relaying the evidence of invalidity to the State court or agency that issued the order and informing the court or agency that its resolution of the matter may affect the administrator’s determination of whether the order is a QDRO under ERISA.5(5) The plan administrator’s ultimate treatment of the order could then be guided by the State court or agency’s response as to the validity of the order under State law. If, however, the administrator is unable to obtain a response from the court or agency within a reasonable time, the administrator may not independently determine that the order is not valid under State law and therefore is not a “domestic relations order” under section 206(d)(3)(C), but should rather proceed with the determination of whether the order is a QDRO." While it is possible under the law of some states to issue a QDRO without a divorce, in other states that is not the law. In my home state of Maryland for example, the applicable statute only grants the court authority to transfer pension and retirement benefits in connection with annulment or absolute divorce. If that does not happen and a transfer is made to the Alternate Payee in the absence of a divorce, the Participant is going to hear from the IRS and will be looking at being solely liable for income taxes on the taxable distribution (to the Alternate Payee), and excess distribution and early withdrawal penalties as well. The opposite is the case with FERS and CSRS and other Federal pensions administered by OPM. [But see below.] 5 CFR § 838.101 provides, inter alia: "In executing court orders under this part, OPM must honor the clear instructions of the court. Instructions must be specific and unambiguous. OPM will not supply missing provisions, interpret ambiguous language, or clarify the court's intent by researching individual State laws. In carrying out the court's instructions, OPM performs purely ministerial actions in accordance with these regulations. Disagreement between the parties concerning the validity or the provisions of any court order must be resolved by the court." And in Rosato v. OPM, 165 F.3d 1377 (U.S.C.A. Federal Circuit 1999), in holding that: “Federal law thus provides the method whereby divorcing spouses may divide their entitlements to federal employee benefits. The statute and rules are clear: OPM will not look behind a state court divorce decree or property settlement order to ascertain the intent of the parties. So long as the decree or order complies with the specificity requirements of the regulations, which implement the statutory requirement that the decree or order "expressly" direct payment to another than the employee, OPM will follow its prescriptions. An order lacking the requisite specificity will be rejected by OPM, with an opportunity for the applicant to cure any indicated error.” (Emphasis provided.) And in Hayward v. OPM, 578 F.3d 1337 (U.S.F.C 2009), where the issue was whether or not the parties intended to include survivor annuity benefits for the former spouse: “We recognize that "OPM is neither qualified nor obligated to resolve disputes about the import of state divorce decrees ... OPM's task is 'purely ministerial' with respect to court ordered property settlements." Perry v. Office of Pers. Mgmt., 243 F.3d 1337, 1341 (Fed. Cir. 2001) (quoting Snyder, 136 F.3d at 1477); see also 5 C.F.R. § 838.101(a)(2). We also recognize that "neither we nor the Board is permitted by the terms of 5 U.S.C. § 8341(h) to rewrite or equitably reform state court divorce decrees or settlement agreements that do not unambiguously provide for a CSRS annuity." Fox, 100 F.3d at 145. Thus, the intent to award a CSRS survivor annuity must be clear.” So there are any number of parties involved: (i) the parties themselves who are attempted to transfer retirement benefits in a situation, such as the entry of a final divorce, where they might otherwise have to wait; (ii) the trial judge who will likely sign anything put in front of him/her if it is by "Consent" of the parties; (iii) the attorneys for the parties who may have intentionally deceived the judge and may have the face the state Grievance Commission; (iv) the IRS who is likely to impose taxes on the Participant and not on the Alternate Payee; and, (v) the Plan Administrator who needs to decide how far to dig into the underlying state law in trying to determine is the DRO is qualified. Notwithstanding the CFR section and cases cited above, OPM requires that a court certified copy of the Court Order Acceptable for Processing be submitted with a court certified copy of the Judgment of Absolute Divorce, a copy of the signed Marital Settlement Agreement (if there is one), and a statement by the former spouse or by the former spouse's representative that, ". . . . the annexed COAP is currently in full force and effect and has not been amended, superceded or set aside by the Court." See Subpart B -Procedures for Processing Court Orders Affecting Employee Annuities, Sections 838.221, 838.224, 838.421, 838.425, 838.721, and 838.424. OPM, it seems, chooses to ignore the CFR Sections cited above. The case mentioned above, Jago v. Jago, 2019 PA Super 246, 217 A.3d. 289 (2019) involved a situation where a happily married parties filed a petition for the entry of a QDRO transferring $400,000 from the husband’s ERISA qualified plan to the wife’s IRA. No divorce action was pending and they admitted had they had no intentions of divorcing. The court analyzed ERISA and the REA and some of the major Federal court decisions and concluded that: “Here, Husband is a participant in an ERISA-governed plan. The parties initiated this case by filing a joint petition for entry of a QDRO for the sole purpose of transferring to Wife's IRA an amount of the Plan benefits, because Wife has a marital property interest in the Plan. See Brown v. Brown, 669 A.2d 969, 972 (Pa.Super. 1995), aff'd, 544 Pa. 360, 690 A.2d 700 (1997) (providing retirement pension benefits, vested and non-vested, are marital property rights subject to equitable distribution upon divorce). But see Boggs, supra. Without the entry of a valid QDRO, the parties' proposed transfer violates ERISA's anti-alienation prohibition. See id.; 29 U.S.C.A. § 1056(d)(1), (3)(A). In their joint petitions and throughout the life of this case, however, Husband and Wife have expressly acknowledged they are married with no pending divorce or other family law matter between them; the parties at no time stated or implied they intended to initiate a support action. Instead, the parties stated in their petitions they wished the Plan benefits to remain marital property upon entry of the proposed QDRO. Thus, the record makes clear there is no current, foreseeable, or desired divorce or domestic relations matter of any kind between Husband and Wife, which is required for the entry of a QDRO under ERISA. See Boggs, supra; Mackey, supra. Under these circumstances, the parties' joint petitions are attempts to circumvent ERISA's anti-alienation proscription. See Boggs, supra; Mackey, supra. The cited persuasive authority leads us to conclude a QDRO is a procedural right derivative of or adjunct to a domestic relations matter, but outside the context of a domestic relations matter, a QDRO is not a distinct, discrete legal claim. See Dorko, supra; Johnston, supra; Ryan, supra; Denaro, supra; Jordan, supra. Accordingly, Wife's claim that a domestic relations action is not a prerequisite to entry of a QDRO fails. “Based upon the foregoing, we hold that absent a divorce or other domestic relations matter pending between spouses, they cannot obtain a QDRO for the sole purpose of moving funds in the participant/spouse's ERISA plan out of the plan to the non-participating spouse.” (Emphasis supplied.) You can find the well written Jago opinion at - https://scholar.google.com/scholar_case?case=7016202236632377044&q=jago+v.+jago&hl=en&as_sdt=4,39 See DoL Advisory Opinion 90-46A, attached, that provides in pertinent part: “With respect to ERISA section 206(d)(3)(B)(ii)(II), it is the view of the Department of Labor that Congress intended the QDRO provisions to encompass state community property laws only insofar as such laws would ordinarily be recognized by courts in determining alimony, property settlement and similar orders issued in domestic relations proceedings. We find no indication Congress contemplated that the QDRO provisions would serve as a mechanism in which a non-participant spouse's interest derived only from state property law could be enforced against a pension plan.” Game, set, match. Add one more factor - the Maryland case of Rohrbeck v. Rohrbeck, 318 Md. 28, 566 A.2d 767 (1989) holds that a QDRO is an enforcement tool only, like a garnishment or an attachment, and is NOT the underlying source of the obligation to transfer retirement benefits set forth in the QDRO. The source of the obligation is the Marital Settlement Agreement incorporated into the Judgment of Absolute Divorce, or, in the absence of a Marital Settlement Agreement, the Judgment of Absolute Divorce itself. This view is held my most states where I have researched the issue. So it become obvious again that without a divorce and a Judgment of Absolute Divorce, you cannot have a valid and enforceable QDRO. To quote Dirty Harry. Advisory Opinion 1999-13A _ U.S - Sham Divorces.pdf Advisory Opinion 1992-17A - duty of Plan Admin.pdf DoL Advivory Opinon 1990-46a.pdf

In what way did he "elect" a lump sum? Do you claim that you did not have notice of that election of a lump sum? How is "benefit commencement date" defined? Does "benefit commencement date" mean the same thing for a lump sum payment and an annuitized payout? How is "death benefit" defined? Is the cause of death a factor in whether there is or is not a death benefit? How is the death benefit computed? If he hadn't elected a death benefit would you have been required under ERISA to pay a survivor benefit to the surviving spouse? Have you computed the present value of that survivor benefit? Is it more or less than the lump sum? How much will it cost you in legal fees paid to your attorneys and to the attorney for the surviving spouse if you have paid her the lowest possible amount? What is the dollar difference between the present value of the survivor annuity and the lump sum and the death benefit? Can the lump sum or the death benefit rolled over by the surviving spouse to an IRA or other eligible retirement account? What are the differences between the lump sum payment and the death benefit? Is it possible that the death benefit is actually a separate benefit in the form of life insurance? [I had a case many years ago where a county pension plans was drafted in such a way that, unbeknownst to the county, there were survivor benefits payable to the non-spouse beneficiary, and also the decedent's surviving child. https://scholar.google.com/scholar_case?case=14512325294449180586&q=angerman&hl=en&as_sdt=4,21 David

Can I assume that this is a cash balance plan?

Read this case from the U.S. District Court in Georgia dealing with the naming of a beneficiary of a pension plan. - https://scholar.google.com/scholar_case?case=7964216609854086279&hl=en&lr=lang_en&as_sdt=20006&as_vis=1&oi=scholaralrt&hist=bY5nDLcAAAAJ:17102308171145443235:AAGBfm2dXJvPo0nUQKlDLqIPUBXxyXMitw&html=&pos=0&folt=kw Who is responsible for the chaos described? The Participant who had no idea what he was doing? The Plan Administrator who obviously was not paying attention to the actions of the Participant and his violation of Plan requirements? The Sponsor who adopted Plan rules that clearly were not understood by the Plan Participant? Lots of lessons here. I suspect the case will be appealed.

C.B. Zeller is right. No human or computer can divide anything exactly into thirds. Somebody has to get the extra penny. The same is true of other fractional divisions come to think of it.

Responding to Peter, there are plenty of cases explaining the reach of Federal preemption under ERISA. Forristall v. Federal Express, Civil Action No. 13-11454, United States District Court, D. Massachusetts (November 21, 2014) Smithson v. Smithson, Civil Action No. 1:15-0583, United States District Court, S.D. West Virginia, Bluefield (2015) McCarthy v. Estate of McCarthy, No. 14-CV-6194 (JMF), United States District Court, S.D. New York (2015) Cunningham v Hebert, Case No. 14 C 9292, United States District Court, N.D. Illinois, Eastern Division. November 1, 2016 In re: Marriage of Steiner and Steiner, No. D071155, Court of Appeals of California, Fourth District, Division One (November 30, 2017) Prudential Insurance Company of America v. McFadden, Civil Action No. 6:19-CV-051-CHB, (USDC, ED Ky 2020) The one thing I have learned in the practice of law is that you can never take anything for granted. State courts are happy to dodge hard issues if they can use "Federal preemption" as a convenient shield." They are like the sword of Damocles hanging about. And if they cannot use Federal preemption, state courts have other ways to avoid the enforcement and collection of post-distribution suits of pension and retirement benefits. They will use the state statute of limitations, the doctrine of laches, res judicata, collateral estoppel, failure of the court to reserve jurisdiction to address such issues, expiration of the time limits imposed by the Rules of Procedure that permit a party to file Motions to alter or amend a Court Order, or to revise, vacate or reform a Court Order or other document, or to remedy an inequity on the grounds of basis of "fraud", "mistake" or "irregularity". Here is a 2019 article from the ABA on Federal preemption that does not mention Andochick and the ability of the intended beneficiary to file a post distribution suit to get around the result in Kennedy. Also attached is my Memo re: workarounds to the outcome in Kennedy. David ERISA Preemption - ABA 2019.pdf RETIREMENT AND LIFE INSURANCE BENEFITS ERISA PREEMPTION etc.pdf

Fidelity acts as TPA for hundreds of Plans so I don't think you can get a feel what what will do in any particular case. But I have reviewed their procedures and model orders in hundred of cases over the years and have never seen the sort of restriction to whole number that you mention. In dealing with Military retirement plans the DoD FMR require that any computation must be rounded down to two decimal points. In 55 years of practice including 36 years preparing pension and retirement documents I have never seen anything like the Gelschus v. Hogen case. In that case the facts were as follows: 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 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 requirement. She allocated "33 1/3%" of the 401(k) benefits to each of her siblings. The instructions said, "The Allocation % must be 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. Would you ever in your wildest imagination think that the beneficiary of a 401(k) plan could not receive a fractional share of the Plan owner's account? I have asked the members of my family law listserv if they always caution their clients, the Participant of a defined contribution Plan, to address this issue in naming the post divorce beneficiary(ies). Would it be malpractice not to do so? Do you know how the scenario set forth above will play out? Who can sue who and for what? And what will happen if Plan assets are dissipated by the unintended beneficiary? Are you familiar with Kennedy v. Plan Adm'r for DuPont Sav. & Inv. Plan, 555 U.S. 285 (2009), Est. of Kensinger v. URL Pharma, Inc., 674 F.3d 131 (3d Cir. 2012), Andochick v. Byrd, 709 F.3d 296, 300 (4th Cir. 2013) and it's progeny, and Metlife Life & Annuity Co. of Connecticut v. Akpele, 886 F.3d 998, 1007 (11th Cir. 2018)? Did you know that in the case, In Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, 136 S. Ct. 651, 193 L. Ed. 2d 556, 577 US 136, (2016), the Supreme Court held that pursuant to 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), [29 U. S. C. §1132(a)(3)] a Plan Administrator may not recover overpayments from a Participant's general assets. Said the Court: "We hold that, when a participant dissipates the whole settlement on non-traceable items, the fiduciary cannot bring a suit to attach the participant’s general assets under §502(a)(3) because the suit is not one for“appropriate equitable relief." Does this ruling, coming as it does from a Federal Court and with respect to Federal law, preempt the ability of the courts of my home state, Maryland, to order the attachment of general assets on a finding that the same behavior by the former spouse amounted to a breach of contract, or contempt of court, or trover and conversion? This is a bad case for everybody.

A new case from the 8th US Circuit Court of Appeals, just issued on August 29th, shows just how complicated beneficiary issues can become. 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 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 requirement. She allocated "33 1/3%" of the 401(k) benefits to each of her siblings. The instructions said, "The Allocation % must be 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. You can read the case, at https://scholar.google.com/scholar_case?case=18383345369852454654&hl=en&lr=lang_en&as_sdt=20006&as_vis=1&oi=scholaralrt&hist=bY5nDLcAAAAJ:17102308171145443235:AAGBfm2dXJvPo0nUQKlDLqIPUBXxyXMitw&html=&pos=1&folt=kw Assume nothing. Just because you're paranoid doesn't mean they're not really out to get you. You can read the Plan documents ad nauseum, but you need to know what you are looking for. Would you ever expect a requirement that the beneficiary of a 401(k) cannot receive a fractional percentage? I have never seen this in 55 years of law practice. David

If you are dealing with an ERISA qualified plan - and we don't know that for sure, a participant's beneficiary in a qualified retirement plan that is subject to the qualified joint and survivor annuity (QJSA) requirements under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (Code) is automatically his surviving spouse, unless the spouse has waived his rights or another exception applies. For plans that are not subject to the QJSA requirements, beneficiary designations are generally a matter of plan design. Under ERISA you can have a beneficiary of a defined contribution plan as well. In general, if you should die before you receive your benefits, your surviving spouse will automatically receive them. If you wish to select a different beneficiary, your spouse must receive notice and/or consent to someone else being named as beneficiary. A beneficiary can also be the person who will receive life insurance proceeds upon the death of the insured party, whether it's an employer sponsored play or not. Most state laws do not permit a judge to direct that one party carry life insurance for the benefit of the other party, so you will not see QDRO requiring a former spouse to be named as a beneficiary of life insurance. The impact of a divorce (or of a limited divorce, or divorce a mensa et thoro) will depend on the terms of the Marital Settlement Agreement ("MSA") if any, and whether or not the MSA is incorporated into the Judgment of Absolute Divorce ("JAD"), or the terms of the JAD if there is no MSA, or the terms of any QDRO or DRO or EDRO or COAP, or similar Court Order, and whether a certified copy of the Court Order was sent to and approved by the Plan Administrator, or whether or not the Plan Administrator had actual notice of the terms of the MSA or the JAD or of the as yet unsubmitted and/or unapproved QDRO. And State, County and Municipal plans, and Union and Church Plans, and International Plans and not bound by ERISA and do things their own way. A beneficiary does not always relate to death. 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)." So a beneficiary can be a person who receives a benefit at the time designated by a QDRO or at the death of the Participant. There are about 175,000 pension and retirement plans in the USA, 163,000 of which are governed by ERISA. See attached somewhat dated list. One thing is certain - the lack of uniformity. The suggest that the original question told you everything you needed to know is quite simply incorrect. You cannot ignore the implications of Kari E. Kennedy, Executrix v. Plan Administrator for Dupont Savings and Investment Plan, 129 S.Ct. 865, 555 U.S. 285 (2009), and its progeny including Andochick v. Byrd, 709 F.3d 296 (2013). Nor can you ignore the responsibilities of the Plan administrator to investigate set forth in DoL EBSA Advisory Opinion 1999 -13A and 1992 - 17A - see attached. All problems cannot be answered by "a close reading of the Plan Documents". There are almost always legal implications. The practice of law requires the ability of the lawyer to ask what, where, why, when, which, who, how, and how much, and to get all of the facts before giving advice. If the purpose of this blog is not to give well reasoned advice, I am in the wrong place. DSG 337474398_QualifiedPlanList.xlsx Advisory Opinion 1992-17A.pdf Advisory Opinion 1999-13A _ U.S. Department of Labor.pdf

Primary beneficiary of WHAT??? What type of Plan? Under what law? ERISA, US Military? FERS or CSRS? FSPS? State? County? Municipal? Union? Church? 401(k) or other defined contribution Plan? Defined benefit Plan? Life insurance Plan? Health Savings Account? Is the Participant alive or dead? Was a QDRO prepared? Entered by the Court? Qualified by the Plan Administrator? If not, is there a reason a QDRO cannot be prepared? If the Participant is dead, if there a reason that a post-mortem QDRO cannot entered pursuant to the Pension Protection Act of 2006. In your second post you used the term "QDRO" so I assume it's an ERISA qualified plan. Am I correct? In divorce cases we call the former spouse the "Alternate Payee". Is there a reason you haven't used that term? How can any of you respond to a question that contains virtually no information upon which you can base your response?

I think this is the workaround: The IRC clearly requires the withholding of 10% for child support QDROs, but some Plan Administrators are not aware of that and send 100% to the Alternate Payee (who should be the child or the "mother and next friend" of the child) and runs a risk (thought to be minimal) that the IRS will pay them a visit. 1st, send 100% to the IRS and send a 1099-R to the Participant with ZERO in Box 4 (Federal withholding), 14 (State withholding) and 17 (Local withholding). The language of the instructions for Box 4 says: "Box 4. Shows federal income tax withheld. Include this amount on your income tax return as tax withheld, and if box 4 shows an amount (other than zero), attach Copy B to your return. Generally, if you receive payments that aren’t eligible rollover distributions, you can change your withholding or elect not to have income tax withheld by giving the payer Form W-4P." This clearly suggests that there is a possibility that Box 4 of the 1099-R could be ZERO. 2nd - the QDRO must contain a provision that affirmatively requires the Participant (or a trustee appointed by the Court to act on behalf of the Participant) to fill out Form W-4P and follow the instructions for that form that say: "Choosing not to have income tax withheld. You can choose not to have federal income tax withheld from your payments by writing “No Withholding” on Form W-4P in the space below Step 4(c). Then, complete Steps 1a, 1b, and 5. Generally, if you are a U.S. citizen or a resident alien, you are not permitted to elect not to have federal income tax withheld on payments to be delivered outside the United States and its possessions." 3rd - add all of the forgoing to the plan documents. At the end of the day the attorney for the payee parent must be instructed to add the language above to the QDRO. Plan Administrators will have a QDRO, a 1099-R, a W-4P, and amended Plan language to protect them. David

I assume they have provided you with documented evidence of their mistake including, for example, the vesting requirements set forth in the Plan documents and the mathematical calculation of your service and vesting percentage from time to time. And I assume they have figured out a way to repay that money without any tax consequences, or offered to pay your accountant to do so. Seriously, however, Plan Administrators have an obligation to recover plan assets. In other words, payments to you that belonged to other Plan Participants. The question is whether not allegedly unvested benefits belong to somebody else? It is my understanding that when the unvested portion of an account is forfeited it is placed in the employer's forfeiture account, where it can then be used to help pay plan administration expenses, reduce employer contributions, or be allocated as additional contributions to plan participants. Do the plan documents provide for recoupment of allegedly unvested benefits. Is a payout of unvested benefits akin to an early retirement subsidy, that is, the act of payment results in implicit vesting. Suggest that they buy a hat.

May I ask where it says in the IRC that the Plan is required to withhold a distribution made to anyone other than the Participant or a spouse or former spouse pursuant to a QDRO? IRC 402(e)(1)(A) states - "For purposes of subsection (a) and section 72, an alternate payee who is the spouse or former spouse of the participant shall be treated as the distributee of any distribution or payment made to the alternate payee under a qualified domestic relations order (as defined in section 414(p))". The spouse or former spouse is NOT the distributee of payments made to the child c/o a parent. If you are not paying taxable income you don't have to withhold. I would be happy to stand corrected. David

My thoughts: 1. Reject the QDRO and let the parties or the judge figure out how the Plan is supposed to withhold taxes on Plan account money that must be distributed in full. 2. Pay out 100% of the Plan account to the "Alternate Recipients" (as we call them in Maryland) per the QDRO and issue a 1099-R to the Participant, and don't worry about withholding on the theory that the alternate recipient are not receiving taxable retirement benefits and is not a party to the tax consequences imposed on the Participant and should not have the amount ordered reduced. See IRC 402(e)(1)(A) - "For purposes of subsection (a) and section 72, an alternate payee who is the spouse or former spouse of the participant shall be treated as the distributee of any distribution or payment made to the alternate payee under a qualified domestic relations order (as defined in section 414(p))". The spouse or former spouse is NOT the distributee of payments made to the child c/o a parent. And this is consistent with the law that makes child support not taxable to the recipient parent. The same would be true in the case of a Participant in pay status with respect to a defined benefit plan. Recognize that this issue will likely become a bigger problem for custodial parents under the SECURE act when Participants need not elect an immediate lump sum distribution and elect some other distribution option. One company I know is making available the following options for its 401(k) Plan as of 1-1-22. Single Lump Sum Payment Option. Partial Lump Sum Payments Option ­Fixed Periodic Amount Option Partial Lump Sum with Fixed Periodic Amount Fixed Time Frame Option ­Fixed Percent Option Life Expectancy Option 50% Joint and Survivor Annuity for married Participants only (not divorced?) whereby the Plan purchases an irrevocable 50% joint and survivor annuity from an insurance company. Uncertainties: When can such elections be made? Before or only after retirement? Before or after divorce? Will such an election be superseded by a QDRO? Will State law preempt the SECURE act? Given that a lump sum distribution is an option, and that a QJSA is an option, would a separate interest allocation be an option as well since IRC 414(p)(2)(B) - (D) neither mandates or restricts the use of a shared or a separate interest allocation, and since 29 USC 1955(d) requires that a QJSA be the actuarial equivalent of a single life annuity for the Participant. The plan says "no". But I say that she should be able to get 50% (or time rule share) of the lump sum in the form of a separate interest annuity. See attached interesting case. David Knight v. IBM Attorney Comment.pdf Knight v. IBM - Complaint.pdf

Defined contribution plans fall under ERISA, and they also fall under the Federal TSP section of the US Code, and they fall under the laws of every State, County and Municipal Plan. The answer to the question posed just may vary with the underlying statutory basis of the plan. More details would have been helpful. For example, re: TSP plans, see https://www.tsp.gov/planning-for-life-events/marriage-and-spouses-rights/ It is my understanding that if a plan is subject to the REA, spousal consent will be required for in-service cash distributions, hardship withdrawals, and plan loans. Spousal consent will not be required, however, when a participant requests these same types of distributions from a plan designed with the REA safe harbor feature. I don't pretend to know how that works in practice. Before you take any action you need to consider whether or not you want to become involved in a Federal case. I don't think the answer to your question will be found on this blog. A wise attorney for the Alternate Payee will send the Plan Administrator a Notice of Adverse Claim/Interest at the earliest possible time and encourage the Plan to take no action that would result in their being potentially liable for double payments and legal fees. DSG

Peter: Think I found what I was looking for. See attached. Bowersox v. Bell Atlantic.pdf I have not had another case like it since 1999 so I cannot account for changes in the law in the past 23 years, but perhaps there is something there that can help you. Bowersox v. Bell Atlantic.pdf David

Peter: I found it, at least some of it. The case I mentioned was a 1999 case filed in the US District Court for the District of Maryland (Baltimore), Bowersox v. Bell Atlantic, No. 99-cv-176-CCB. The docket entries are attached. I don't have access to Pacer so this is about as far as I can go. I realize the law may have changed in 23 years, but my recollection of the case is that the Plaintiff had either stolen or embezzled or maybe even negligent caused a loss and Bell Atlantic tried to access her 401(k) Plan as self help restitution. My files from those days are long gone and I cannot identify a memo of points and authorities from the docket entries. Hopefully you have somebody who practices in the Federal system to can access Pacer. Let me know if you find anything. David Bowersox Docket Entries.pdf

Not sure any of this will be helpful, but I did come across a few cases where the parties tried to avoid criminal restitution by having a QDRO entered in order to transfer the retirement assets of the criminal defendant to his spouse. See the attached Memo. See also attached DoL ESBA 1999 Advisory Opinion 13A. David Advisory Opinion 1999-13A _ U.S. Department of Labor.pdf Restitution.pdf

I ran into a similar issue with a union plan. Everything in their Plan Documents confirmed the availability of a "100% QJSA". It turns out that what they meant is the that the Plan would pay a survivor annuity equal to 100% of the maximum survivor annuity that Plan permitted, and that was only 50% of the retirement annuity. This is not unlike FERS where the maximum survivor annuity is 50% of the self only retirement annuity. Or CSRS or the Military where the maximum survivor annuity is 55%. We always use "maximum" if that's what we intend. So what may be happening in your case s that they are using "100%" instead of "maximum" survivor annuity. I had another union case where they argued that 100% QJSA meant that 100% QJSA meant that the Alternate Payee must receive 100% of both the retirement annuity and 100% of the survivor annuity. Let us know what happens.

"DIvorced plan participant dies. QDRO $$ was allocated to the ex-wife a few months ago. Plan participant dies last week and his bene is still the ex-wife. No updated bene form was completed. She is entitled to his 401k, correct? His contigent benficiares are his 2 sons." Is you statement that "QDRO $$" your way of saying that a portion of the Participant's 401(k) balance was allocated to the ex-wife as the Alternate Payee by a QDRO that was served on and approved by the Plan Administrator? Are you suggesting that there is some other potential recipient for the amount allocated by the QDRO? Confirm that you are aware of the Pension Protection Act of 2006 and 29 C.F.R. 2530.206(c)(1) permitting the entry of a post mortem (posthumous) QDRO so that even if the QDRO is defective it could be reissued and the Plan would have to enforce it. Let's assume that the decedent named the former spouse named his ex-wife as the beneficiary of his 401(k) and never changed that designation. I have never seen a plan that negated a beneficiary designation on divorce. Believe it or not there are Marital Settlement Agreements ("MSA") drafted whereby the Participant agrees to maintain the former spouse as the beneficiary. Was there anything in the MSA or in the Judgment of Divorce that addressed the 401(k) Plan? What did it say? Facts matter. If it said that ex-wife gets $100,000 and the children get the balance, then that's interesting but not defininative. See Kari E. Kennedy, Executrix v. Plan Administrator for Dupont Savings and Investment Plan, 129 S.Ct. 865, 555 U.S. 285 (2009) that involved a situation where the former spouse was deemed by the trial court to have waived her interest in her former husband’s retirement plan. The former husband failed to change the beneficiary of his Plan and on his death the retirement plan proceeds were paid to the former spouse whose name continued to appear on the beneficiary designation in the hands of the Plan Administrator. The Supreme Court said that was the proper outcome, that the Plan Administrator was required to pay the proceeds to the designated beneficiary. BUT.... the question was, can the estate of the husband in Kennedy sue the decedent’s ex-wife for unjust enrichment and recoup her ill gotten gain (which she will have undoubtedly deposited into a bank in the Cayman Islands in a company set up by her brother-in-law through a Cayman attorney whose identity as the owner of these funds will shield the identity of the true owner of the account?) Or how about suing the ex-wife as constructive trustee of the proceeds in her hands? The Supreme Court in Kennedy expressed disclaimed any intention to answer the foregoing question, saying in Footnote 10: "Nor do we express any view as to whether the Estate could have brought an action in state or federal court against Liv to obtain the benefits after they were distributed. Compare Boggs v. Boggs, 520 U.S. 833, 853, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997) ("If state law is not preempted, the diversion of retirement benefits will occur regardless of whether the interest in the pension plan is enforced against the plan or the recipient of the pension benefit"), with Sweebe v. Sweebe, 474 Mich. 151, 156-159, 712 N.W.2d 708, 712-713 (2006) (distinguishing Boggs and holding that "while a plan administrator must pay benefits to the named beneficiary as required by ERISA," after the benefits are distributed "the consensual terms of a prior contractual agreement may prevent the named beneficiary from retaining those proceeds"); Pardee v. Pardee, 2005 OK CIV APP. 27, ¶¶ 20, 27, 112 P.3d 308, 313-314, 315-316 (2004) (distinguishing Boggs and holding that ERISA did not preempt enforcement of allocation of ERISA benefits in state-court divorce decree as "the pension plan funds were no longer entitled to ERISA protection once the plan funds were distributed")." (Emphasis supplied.) Note that the Kennedy decision was consistent with the Maryland case of PaineWebber v. East, 363 Md. 408, 768 A.2d 1029 (2001) - which you can find at - http://scholar.google.com/scholar_case?case=14624602948014812254&q=paine+webber&hl=en&as_sdt=4,21. In that case the husband failed to remove his ex-wife's name as beneficiary of his IRA account [IRAs are not subject by ERISA] valued at about $600,000.00 which, per the agreement of the parties, he was to retain as his property. The husband remarried and then died without having changed the beneficiary. The former spouse filed suit to recover the IRA balance arguing that she was the named beneficiary - which was true. The Court of Appeals held that the former spouse would receive the money despite language in the separation agreement that provided: "Each of the parties hereby expressly waives any legal right either may have under any Federal or State law as a spouse to participate as a payee or beneficiary regarding any interests the other may have in any pension plan, profit-sharing plan, or any other form of retirement or deferred income plan including, but not limited to, the right either spouse may have to receive any benefit, in the form of a lump-sum death benefit, joint or survivor annuity, or pre-retirement survivor annuity pursuant to any State or Federal law, and each of the parties hereby expressly consents to any election made by the other, now or at any time hereafter, with respect to the recipient and the form of payment of any benefit upon retirement or death under any such pension plan, profit-sharing plan, or other form of retirement or deferred income plan." An IRA does not fall under ERISA, but the outcome was the same. There are a growing number of cases where court have found creative ways to circumvent Kennedy post-distribution. So Mr. ratherbereading, I would be grateful is you would quote exactly the language of the Plan document that says would not rely on language in the Plan that speaks of revocation of a beneficiary designation of a former spouse. "It ain't necessarily so." I don't believe it only says "a divorce automatically revokes a beneficiary designation of a former spouse." I would place a small wager that it says MORE than that. Your statement that you didn't look at the Plan language first is disconcerting.

When an employee terminates employment the loan balance normally reduces the vested balance of the account that can be rolled over by the Participant or taken as a direct distribution. Using severance pay is fine, but the loan repayment must be in after tax dollars. Is this the best option for the employee from an income tax point of view? Might not the severance pay kick the employee into a higher tax bracket. This makes me uncomfortable. From a divorce context, if an Alternate Payee is going to receive a share of the Participant's 401(k) plan, outstanding loans can be included or excluded. If they are included, then they are ignored for purposes of computing the value of the account, and the full amount in the 401(k) plan may be marital property. But severance pay is not considered marital property in most states. See below. Most states that have considered it have held that severance pay is a substitute for income lost while the employee looks for a new job and is not a form of deferred compensation that might be considered to be marital property. Even if severance pay is viewed as “marital property”, it is not a qualified plan and is not enforceable with a QDRO or other court order. Or isn’t it just “income” for child support and alimony purposes? In Sharp v. Sharp, 58 Md.App. 386, 473 A.2d 499 (1984), in a discussion of dissipation of marital property, the CSA, cited, “In Re the Marriage of Faulkner, 582 S.W.2d 292, 295-96 (Mo.App.1979) (where jointly owned stocks were endorsed by husband and cashed by wife without sharing the proceeds, and where bank accounts containing wife's severance pay and retirement benefits were appropriated solely by the wife, the trial judge did not abuse his discretion by including these depleted assets in the division of marital property);” Faulkner was also cited in Ross v. Ross, 90 Md. App. 176, 600 A.2d 891 (1992). But if you read the Faulkner case and other cases from Missouri, you will conclude that the Faulkner court was including the severance pay in its determination of a marital property award, and not as marital property itself. And there is a statute in Missouri that specifically describes severance pay as an element of income. Read the unreported decision in Pisano v. Pisano - Nos. 0853 & 2019, September Term, 2014, Court of Special Appeals of Maryland (2015) - https://scholar.google.com/scholar_case?case=16952077831845019052&q=pisano+v.+pisano&hl=en&lr=lang_en&as_sdt=4,21&as_vis=1 If you want to dig a little deeper, see: 1. Siljendahl v. Siljendahl, Not Reported in N.W.2d, 2009 WL 511302, Minn.App., March 03, 2009 (NO. A08-0509) 2. In re Marriage of Lodeski, 107 P.3d 1097, Colo.App., November 18, 2004 (NO. 04CA0515) 3. Ash v. Ash, Not Reported in S.E.2d, 2004 WL 555478, Va.App., March 23, 2004 (NO. 1943-03-2). 4. Dunnan v. Dunnan, 261 A.D.2d 195, 690 N.Y.S.2d 46, 1999 N.Y. Slip Op. 04542, N.Y.A.D. 1 Dept., May 13, 1999 (NO. 1044, 1043). 5. Luczkovich v. Luczkovich, 26 Va.App. 702, 496 S.E.2d 157, Va.App., February 24, 1998 (NO. 2975-96-2) 6. Flynn v. Thompson, Not Reported in A.2d, 1997 WL 908393, Del.Fam.Ct., December 01, 1997 (NO. CN96-07917, 96-13266) 7. In re Marriage of Heupel, 936 P.2d 561, 21 Colorado Journal 575, Colo., April 21, 1997 (NO. 95SC754) 8. In re Marriage of Flud, 926 S.W.2d 201, Mo.App. S.D., June 26, 1996 (NO. 20311) 9. McClure v. McClure, 98 Ohio App.3d 27, 647 N.E.2d 832, Ohio App. 2 Dist., October 05, 1994 (NO. 93 CA 79) 10. Ressler v. Ressler, 434 Pa.Super. 563, 644 A.2d 753, Pa.Super., July 06, 1994 (NO. 03657 PHL 1993) 11. In re Marriage of Miller, 888 P.2d 317, Colo.App., June 02, 1994 (NO. 93CA1240) 12. Moore v. Digital Equipment Corp., 868 P.2d 1170, Colo.App., January 27, 1994 (NO. 93CA0569, 93CA0223) 13. In re Marriage of Holmes, 841 P.2d 388, Colo.App., October 08, 1992 (NO. 91CA1415) 14. Hutto v. Hutto, Not Reported in S.W.2d, 1992 WL 162870, Ark.App., July 08, 1992 (NO. CA 92-51) 15. Ryan v. Ryan, 261 N.J.Super. 689, 619 A.2d 692, N.J.Super.Ch., June 01, 1992 (NO. M-602-90) 16. Mears v. Mears, 305 S.C. 150, 406 S.E.2d 376, S.C.App., June 10, 1991 (NO. 1667) 17. Dillard v. Dillard, 28 Ark.App. 217, 772 S.W.2d 355, Ark.App., June 21, 1989 (NO. CA88-359) 18. Gentry v. Gentry, Not Reported in S.W.2d, 1986 WL 11477, Tenn.Ct.App., October 16, 1986 (NO. 85-318-II) 19. Robert Fensterer v. Gloria D. Fensterer, 1985 WL 384550, 13 Phila.Co.Rptr. 51, Pa.Com.Pl., June 05, 1985 (NO. NO. 7995.) 20. Lawyer v. Lawyer, 702 S.W.2d 790, 288 Ark. 128 (1986) See: 317 cases nationwide collected at - http://scholar.google.com/scholar?q="severance+pay"+"marital+property"&btnG=&hl=en&as_sdt=ffffffffffffe04 See the recent case of Zgrablich v. Cardone Industries, Inc., Civil Action No. 16-4665 (U.S.D.C. ED. Pa. 2016) discussing whether or not a severance plan can be ERISA qualified. https://scholar.google.com/scholar_case?case=13502510190377230837&q=Zgrablich+v.+Cardone+Industries,+Inc.&hl=en&as_sdt=4,39,361

You have a number of issues that you need to resolve. I have cut and pasted your posting and set forth my responses in bold type. "I may have made a grievous financial error. Under the terms of my 2013 QDRO, I'm entitled to 100% of the marital share of my ex's pension. The QDRO language says that you are entitled to "100% of the Participant's total vested account balance under the Plan as of June 1, 2012, plus or minus any earnings and investment gains or losses thereon from June 1, 2012, to the date the Alternate Payee's share is segregated into a separate account in the Alternate Payee's name under the Plan." This is not 100% of the marital share - it's 100% of the total account and that would include any pre-marital share earned prior to June 1, 2012. But all of the language of the QDRO is what you would expect to see in a QDRO for a defined contribution plan, a 401(k) Plan for example, not the Employees’ Retirement Plan of the National Education Association, a defined benefit plan. So either: (i) the QDRO was incorrectly drafted; (ii) or the plan involved was actually intended to address the National Education Association 401(K) Retirement Savings Plan. You need to review the Agreement signed by the parties, or, if there was no written Agreement (and you did not dictate an Agreement into the record in open court) you need to see what the Judge ordered in the Judgment of Divorce. So, to state it differently, the QDRO is talking about apples and the Plan is oranges. QUERY: Are you sure there were not two QDROs issued in the case? His plan's administrator in 2013 told me I'd start getting the pension when my ex retired. (That's my recollection. I'm hoping to find this exchange in writing.) This advice from the plan administrator is consistent with what you would expect if the plan was a defined benefit plan AND if you were to receive a "shared interest" in the Participant's benefits. A shared interest is where you "share" a portion of the Participant's benefit if, as and when he enters pay status. The formula to determine your share, referred to as the "time value" or coverture formula, would be to take 50% of the amount of Participant's gross monthly retirement annuity and multiply it by a fraction, the numerator is the total number of months during the marriage (not beyond June 1, 2012, in your case IF that is the date of divorce) of accrued creditable service toward retirement, and the denominator of which is the total number of months of creditable service earned as of the date of retirement. But there is another option for defined benefit plans - a separate interest wherein you get a share of the pension as if you had been an employee and stopped working and were just waiting for your benefits to start. See attached explaining the difference between shared and separate. In a separate interest annuity you can start to draw your share when he reached age 50 AND is eligible to retire regardless of if he retires or not. In a shared interest annuity you must wait until he retires before you start to receive your share. In a separate interest annuity your share lasts for your entire lifetime. In a shared interest annuity your annuity terminates on his death but you then would normally receive a survivor annuity. The language of your QDRO does not mention survivor annuity benefits. QUITE HONESTLY, I DON'T THINK YOU AND THE PLAN ADMINISTRATOR ARE LOOKING AT THE SAME DOCUMENT. No competent plan administrator would look at the QDRO language you posted and conclude that you were entitled to a shared interest in a defined benefit plan. Every word of your QDRO language is inconsistent with a defined benefit plan. The last time I dealt with NEA my contact was: Plan Administrator of Defined Benefit Plan:c/o Jim Groves, Sr. Benefits Specialist, 1201 16th Street, NW, Washington, DC 20036, jgroves@nea.org, Jim Groves Voice - (202) 822-7611, HR Office: Tel: 202-822-7600. I suggest that you hire a lawyer who knows what he is doing and have him/her go to the Courthouse and get copies of the QDRO(s) entered by the Court, the Judgment of Divorce, the written agreement that you and you former husband signed, or the oral agreement read into the record, and try to figure out what is going on. As far as back payments are concerned, that would only apply if the QDRO gave you a separate interest allocation that you could have taken at some prior date that met the "age 50 rule" mentioned above. But if you didn't take it then you haven't actually lost it. I you took you share in the past you would have received a lesser amount then for a longer life expectancy. If you take it now you will receive a larger share for what is now a shorter life expectancy. From an actuarial standpoint the present value of your share will be the same. But you first need to figure out what is going on. My ex is now age 62. He became eligible to retire at age 60, with 20 years of continuous service. I recently asked him about his intended retirement date. He referred me to his retirement plan administrator, who told me I was eligible to start my benefit "at any time." Have I forfeited either 2 or 9 years of pension payments? Is there any possible way for me to get back payment? My QDRO is below, and the retirement plan is attached. Thanks for helping me think this through! Best, Christie QDRO EXCERPT 8. The parties and the Court intend this Order to constitute a "Qualified Domestic Relations Order" as defined in Section 414(p)(l) of the Internal Revenue Code of 1986, as amended (the "Code”), and Section 206(d)(3)(B) of the Employee Retirement Income Security ^ct of 1974, as amended ("ERISA"). 9. This Order is issued pursuant to Section 20-107.3 of the 1950 Code of Virginia, as amended, which relates to the division of marital property rights between spouses and former spouses in actions for divorce. 10. The Alternate Payee is hereby assigned One Hundred Percent (100%) of the Participant’s total vested account balance under the Plan as of June 1, 2012, plus or minus any earnings and investment gains or losses thereon from June 1, 2012, to the date the Alternate Payee's share is segregated into a separate account in the Alternate Payee's name under the Plan. Such "total vested account balance" shall include all amounts which have accumulated under allof the various accounts and/or subaccounts established and maintained under the Plan on the Participant's behalf. There were no loans against the account as of June 1, 2012. The Alternate Payee's share of the benefits as set forth above shall be allocated on a pro rata basis among all of the accounts and/or investment funds maintained on behalf of the Participant under the Plan. If applicable, the Alternate Payee's share shall be paid from the non-loan assets in the Participant's account(s) on the date that the award is distributed from the Participant's account. 11. As soon as administratively feasible following the determination that this Order as a Qualified Domestic Relations Order, the Alternate Payee’s share as awarded hereunder shall dc segregated and separately maintained in an account established on the Alternate Payee's Behalf and shall additionally be credited with any investment earnings or losses attributable :hereon from the segregation date to the date of total distribution to the Alternate Payee. Notwithstanding the foregoing, the Alternate Payee may elect to receive her benefits in any brm or permissible option under the Plan, including, but not limited to, an immediate lump sum cash payment and/or a direct rollover into an IRA or other qualified retirement account in the Alternate Payee's name. 12. The Alternate Payee shall be eligible to receive payment as soon as administratively feasible following determination that this Order is a Qualified Domestic Relations Order. 13. If the Participant predeceases the Alternate Payee prior to payment of the Alternate Payee's assigned benefits under the Plan, payment to the Alternate Payee shall nonetheless be made under the terms of this Order. If the Alternate Payee dies before full payment to Alternate Payee has been made, the amount unpaid shall be made to the beneficiary designated by the Alternate Payee, or if no beneficiary has been so designated, in accordance 14. No benefits have been previously assigned from the Participant's interest to another alternate payee under another order which has been determined to be a QDRO. 15. This transfer is intended to be a trustee-to-trustee transfer and a non-taxable went to either party; however, if the Alternate Payee elects to receive a direct distribution from he Plan, the Alternate Payee shall be treated as the distributee under 26 U.S.C. Sections 72 and 102 of the Internal Revenue Code on Federal, State and local income tax returns for all retirement benefits and distributions that the Alternate Payee receives due to the benefits assigned herein, and, as such, will be required to pay the appropriate Federal, State, and local income taxes on such distributions. 16. The Alternate Payee shall notify the Plan Administrator in writing of any change in her mailing address as set forth above. 17. If the Plan is terminated, the Alternate Payee shall be entitled to receive the portion of the Participant’s benefits as stipulated herein in accordance with the Plan's termination provisions for participants and beneficiaries. 18. This Order does not require (i) the Plan to provide any type or form of benefit option not otherwise provided under the Plan; (ii) the Plan to provide increased benefits (determined on the basis of actuarial value); or (iii) the payment of any benefits to the Alternate with Plan provisions. Payee which are required to be paid to another alternate payee under another order previously determined to be a Qualified Domestic Relations Order. Shared v. Separate - 02-18-2022.pdf

Please tell me if I understand you question. "[IN AN ERISA QUALIFIED PLAN] Somehow a participant started [RETIRED AND ENTERED PAY STATUS] his pension on a QJSA without actually being married [AT THE TIME OF HIS RETIREMENT]- he was divorced prior to initiating his benefits and apparently just lied on the application? [LIED ABOUT WHAT? ABOUT HAVING A FORMER SPOUSE ENTITLED TO SURVIVOR ANNUITY BENEFITS - HOW DO YOU KNOW THIS?] That participant has now died and the lack of marriage discovered. [BUT IN ORDER TO HAVE A SURVIVOR ANNUITY HE DID NOT NEED TO BE MARRIED AND HAVE A CURRENT SPOUSE, HE ONLY NEEDED TO BE MARRIED AND HAVE A FORMER SPOUSE - SO WHAT IS THE RELEVANCE OF THE "LACK OF MARRIAGE] No payments have been made to the would-be surviving spouse. [IF HE WAS DIVORCED PRIOR TO TO ENTERING PAY STATUS THERE MIGHT NOT BE A SURVIVING SPOUSE BUT THERE MIGHT BE A SURVIVING FORMER SPOUSE] Any thoughts about how the plan should correct for this, if at all? The plan has not been made aware of any QDRO. It seems to me that the plan is just done now, and doesn't have any obligation to pay out the difference between what his SLA would have been and what the QJSA was. [KEEP IN MIND THAT IF THERE WAS A MARITAL SETTLEMENT AGREEMENT OR A JUDGMENT OF DIVORCE AWARDING SURVIVOR BENEFITS TO HIS FORMER SPOUSE, THE PENSION PROTECTION ACT OF 2006 PERMITS THE ENTRY OF A POST-MORTEM/POSTHUMOUS QDRO SO THE MATTER REMAINS OPEN.] AND KEEP IN MIND Advisory Opinion No. 1999-13A , the DOL Division of Fiduciary Interpretation Office of Regulations and Interpretations The full Opinion can be found at https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/1999-13a. The first line of the Opinion states "This is in response to your request on behalf of the UAL Corporation (UAL) and United Air Lines, Inc. (United) for an advisory opinion. Specifically, you ask how a plan administrator should treat domestic relations orders the plan administrator has reason to believe are "sham" or "questionable in nature." Later on the Opinion continues: "You have asked for an advisory opinion as to whether, and if so when, a plan administrator may investigate or question a domestic relations order submitted for review to determine whether it is a valid “domestic relations order” under State law for purposes of section 206(d)(3)(B) of ERISA." The response was as follows inter alia: "When a pension plan receives an order requiring that all or a part of the benefits payable with respect to a participant be paid to an alternate payee, the plan administrator must determine that the judgment, decree or order is a “domestic relations order” within the meaning of section 206(d)(3)(B)(ii) of ERISA — i.e., that it relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child or other dependent of the participant and that it is made pursuant to State domestic relations law by a State authority with jurisdiction over such matters. Additionally, the plan administrator must determine that the order is qualified under the requirements of section 206(d)(3) of ERISA. It is the view of the Department that the plan administrator is not required by section 206(d)(3) or any other provision of Title I to review the correctness of a determination by a competent State authority pursuant to State domestic relations law that the parties are entitled to a judgment of divorce. See Advisory Opinion 92-17A (Aug. 21, 1992). Nevertheless, a plan administrator who has received a document purporting to be a domestic relations order must carry out his or her responsibilities under section 206(d)(3) in a manner consistent with the general fiduciary duties in part 4 of title I of ERISA." "For example, if the plan administrator has received evidence calling into question the validity of an order relating to marital property rights under State domestic relations law, the plan administrator is not free to ignore that information. Information indicating that an order was fraudulently obtained calls into question whether the order was issued pursuant to State domestic relations law, and therefore whether the order is a “domestic relations order” under section 206(d)(3)(C). When made aware of such evidence, the administrator must take reasonable steps to determine its credibility. If the administrator determines that the evidence is credible, the administrator must decide how best to resolve the question of the validity of the order without inappropriately spending plan assets or inappropriately involving the plan in the State domestic relations proceeding. The appropriate course of action will depend on the actual facts and circumstances of the particular case and may vary depending on the fiduciary’s exercise of discretion. However, in these circumstances, we note that appropriate action could include relaying the evidence of invalidity to the State court or agency that issued the order and informing the court or agency that its resolution of the matter may affect the administrator’s determination of whether the order is a QDRO under ERISA.5(5) The plan administrator’s ultimate treatment of the order could then be guided by the State court or agency’s response as to the validity of the order under State law. If, however, the administrator is unable to obtain a response from the court or agency within a reasonable time, the administrator may not independently determine that the order is not valid under State law and therefore is not a “domestic relations order” under section 206(d)(3)(C), but should rather proceed with the determination of whether the order is a QDRO." IT MIGHT BE A GOOD IDEA TO INVESTIGATE AND DETERMINE IF A MARITAL SETTLEMENT AGREEMENT WAS SIGNED BY THE PARTIES AND INCLUDED SURVIVOR BENEFITS, OR IF A JUDGMENT OF DIVORCE ADDRESSED TO SURVIVOR BENEFITS, OR WHETHER A QDRO SHOULD HAVE BEEN BUT WAS NEVER ENTERED, OR WHETHER THE QDRO WAS ENTERED BUT NEVER RECEIVED BY THE PLAN, OR WHETHER THE QDRO WAS RECEIVED BY THE PLAN BUT REJECTED. KEEP IN MIND THAT THE PLAN ADMINISTRATOR HAS A FIDUCIARY RELATIONSHIP TO PROTECT THE PARTICIPANT AND THE ALTERNATE PAYEE. DAVID

It is no wonder that I was not able to find DoL Advisory Opinion 90-46A online. It is bizarre for a number of reasons. First, the QDRO was issued by a Probate Court after the death of the Alternate Payee at a time when she was no longer a "spouse" or a "former spouse" of the Participant. Although we could have a metaphysical argument about whether she was a former spouse, she was in fact a dead spouse. And the QDRO directed the payment of retirement assets to the estate of the Alternate Payee. (What would have happened if the QDRO had directed payment directly to the Alternate Payee? Would the payment have wound up in her estate?) I am put in mind of Al Jolson who used to say, "You ain't seen nothin' yet." The author of the Advisory Opinion says, "In the case at hand, the Court Order was issued in a probate proceeding and would recognize an interest in pension benefits of the surviving spouse solely on the basis of the state community property law." So? 29 USC 1056(d)(B )(3)(ii) [ERISA § 206(d)(3)(B)(ii)] provides: "(ii)the term “domestic relations order” means any judgment, decree, or order (including approval of a property settlement agreement) which— (I)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 (II)is made pursuant to a State domestic relations law (including a community property law)." (Emphasis supplied.) Perhaps "community property laws" were not part of the law in 1992. And as much as some of you guys want to trash DoL publications as not having the force and effect of law, the DoL publication "QDROs - The Division of Retirement Benefits Through Qualified Domestic Relations Orders" is unequivocal: "Q 1-8: Must a domestic relations order be issued as part of a divorce proceeding to be a QDRO? "No. A domestic relations order that provides for child support or recognizes marital property rights may be a QDRO, without regard to the existence of a divorce proceeding. Such an order, however, must be issued pursuant to state domestic relations law and create or recognize the rights of an individual who is an "alternate payee" (spouse, former spouse, child, or other dependent of a participant). "An order issued in a probate proceeding begun after the death of the participant that purports to recognize an interest with respect to retirement benefits arising solely under state community property law, but that doesn't relate to the dissolution of a marriage or recognition of support obligations, is not a QDRO because the proceeding does not relate to a legal separation, marital dissolution, or family support obligation." (Emphasis supplied.) Note that this case preserves the holding under the facts set forth in AO 90-46A and cites ERISA 260(d)(3)(B). "[ERISA § 206(d)(3)(B); IRC § 414(p)(1); Advisory Opinion 90-46A (Appendix A); see Egelhoff v. Egelhoff, 121 S.Ct. 1322, 149L. Ed. 2d 264 (2001); see Boggs v. Boggs, 520 U.S. 833, 117 S.Ct. 1754 (1997)]" While Jago v. Jago, 2019 PA Super 246, 217 A.3d. 289 (2019) is totally at odds with the foregoing, Mr. and Ms. Jago could have followed the lead of Brown v. Continental Airlines, 647 F.3d 221 (5th Cir. 2011), that is, filed for divorce, had the QDRO executed by the Court, qualified by the Plan Administrator, the money transferred to the wife's IRA, and then remarried. It is in the very nature of Legislatures and Judges to have no idea of the one enduring reality of life in the family law arena - that people have the ability to be very creative when it comes to accomplishing what the people who draft the law are trying to prevent. Even outside of family law, in the early days of my practice the law in DC required the payment of a transfer taxes when real estate was transferred one party to another. But the same tax was not imposed if a party transferred the property to a corporation that he owned, or to himself from a corporation that he owned. So what happened, the owner of the property would simply transfer the real estate corporation that he solely owned. He would then sell the shares of the corporation to the intended buyer of the property tax free. The new owner of the stock would transfer the property from the corporation to himself tax free. This was embarrassingly simple. The legislature never thought of that. David

I hate to point out that BG5150 did not bother to say it is an ERISA qualified plan, but your answers assume that it is so I will go with that. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> And Peter Gulia cites § 206(d)(3)(B)(ii)(I)’s that provides: "(ii)the term “domestic relations order” means any judgment, decree, or order (including approval of a property settlement agreement) which— (I)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 (II)is made pursuant to a State domestic relations law (including a community property law)." >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Note that I cannot find DoL Advisory Opinion 90-46A anywhere online. If anybody has a copy please post it to this blog. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> See the attached FAQ page from the DoL where at the bottom of the 2nd page is says - "Must a domestic relations order be issued as part of a divorce proceeding to be a QDRO? "A domestic relations order that provides for child support or recognizes marital property rights may be a QDRO, without regard to the existence of a divorce proceeding. Such an order, however, must be issued pursuant to state domestic relations law and create or recognize the rights of an individual who is an alternate payee (spouse, former spouse, child, or other dependent of a participant). * * * * "Reference: ERISA § 206(d)(3)(B); IRC § 414(p)(1); Advisory Opinion 90-46A; see Egelhoff v. Egelhoff, 121 S. Ct. 1322, 149 L. Ed. 2d 264 (2001); see Boggs v. Boggs, No. 97-79 (S. Ct. June 2, 1997)" So if the law of Louisiana provides for a transfer to a spouse not in connection with a divorce proceeding, that would be valid. But to CYA I would get an opinion of counsel confirming that to be the case. David USDeptLabor4pageQdroFAQs.pdf