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The proper phraseology for FERS and CSRS Orders administered by OPM is Court Order Acceptable for Processing - COAP. An Order labeled as a QDRO will be rejected See - https://www.ecfr.gov/current/title-5/chapter-I/subchapter-B/part-838 "A substantial number of State court orders are drafted under the mistaken belief that the Employee Retirement Income Security Act (ERISA) (29 U.S.C. 1001 et seq.) applies to CSRS benefits. Sections 1003(b)(1) and 1051 of title 29, United States Code, exempt CSRS from ERISA, because CSRS is a “governmental plan” as defined in section 1001(23) of title 29, United States Code. Accordingly, OPM does not honor ERISA Qualifying Domestic Relations Orders (QDRO's) except to the extent that the law governing CSRS expressly authorizes compliance with State court orders. OPM will honor the orders to the extent permitted by CSRS. However, many provisions of ERISA QDRO's are not authorized under CSRS. Most significantly, a court cannot require that payments to the former spouse begin before the employee actually retires (i.e., begins to receive benefits) and, unless the order expressly provides that the former spouse is entitled to a survivor annuity, the payments to the former spouse cannot continue after the employee dies." The rules are all different since CSRS and FERS is not under ERISA. Ex: Only shared interest allocations of benefits are available. No separate interest allocations are allowed. It is the full and unreduced "self only" amount of the Employee's/Retiree's retirement that is that is allocated, not the "gross" (the self only less cost of survivor annuity)" or "net". See 5 CFR 838.103. There are no joint and survivor annuity benefits. It's a "former spouse survivor annuity" The parties are identified as the Employee/Retiree and the Former Spouse. If the Former Spouse remarries prior to age 55 she irrevocable loses the survivor annuity whether or not it's in the COAP. The maximum survivor annuity for FERS is up to 50% of the self only amount of the retirement annuity. 55% under CSRS. There is a cost to the survivor annuity. 20% of the amount of survivor annuity selected payable monthly starting at the time the Employee enters pay status. It is imperative to state who will pay the the cost. If you are silent...the Employee/Retire pays it all. See 5 CFR 838.807(c). THE FACT THAT AN EMPLOYEE MAY RETIRE DURING THE MARRIAGE AND SELECT A MAXIMUM SURVIVOR BENEFIT ON THE APPLICATION FOR IMMEDIATE RETIREMENT (SEE ATTACHED) DOES NOT SURVIVOR A LATER DIVORCE. IT MUST BE REINSTATED BY A QDRO. Since the Employee may die in service you need to address the Basic Employee's Death Benefit. There is no cost and the benefit is huge. And the above if just the tip of the iceberg. There are defaults what will cause paid to your clients and must be addressed. See 5 CFR 838.237(c)(3). If it's FERS, don't forget the special annuity supplement. Don't forget to mention COLAs for the the retirement and survivor benefits. In many states, if the parties don't specifically identify survivor annuity benefit in their MSA, or of the judge doesn't mention it in the JAD, the Former Spouse will not get it .... period full stop. That's the law in Maryland and Tennessee. I don't know about New York. Your friend better find somebody in NY or anywhere for that matter before he/she is sued for malpractice and paid a visit by Bar Counsel for violation of the Rules of Professional responsibility. Treading on dangerous waters here. DSG Appl for Immediate Annuity CSRS SF2801.pdf Appl for Immediate Annuity FERS SF3107.pdf

You need to start with the premise that there never was a "loan". A loan is where you go to the bank and they give your the bank's money and you pay it back to the bank with interest. A 401(k) loan is where to go to your plan administrator and they give you your own money and your pay it back to yourself with interest. Once he left the company and they deducted the "loan" balance from his distribution and withheld taxes there was no "loan" left for him to repay....ever. It ceased to exist. What benefit would he accrue from paying back the loan. He cannot deduct it from his income. Tell him to make maximum contributions to the 401(k).

The plan documents may not require notice to and/or consent by the former spouse, but does the law underlying your plan have such a requirement? The problem is that you now have actual notice that there is an Alternate Payee who is entitled to a share of your Participant's 401(k) Plan. The underlying obligation is not set forth in the COAP - viewed by most courts as an enforcement tool like an attachment or garnishment. It's in the JAD or the MSA incorporated into the JAD. As the Plan Administrator you have a fiduciary obligation to both parties. Would you be fulfilling those duties if you paid out the full amount to the Participant? Most Plan Administrators who have received such actual knowledge refuse to make any distributions until the matter is resolved by the parties in court. One of the questions you need to consider is whether or not you have a duty to investigate the information you have have in hand. Read the two DoL Advisory Opinions attached. David

The plan documents may not require notice to and/or consent by the former spouse, but does the law underlying your plan have such a requirement? The problem is that you now have actual notice that there is an Alternate Payee who is entitled to a share of your Participant's 401(k) Plan and that the Participant plans to appropriate those funds to himself. As the Plan Administrator you have a fiduciary obligation to both parties. Would you be fulfilling those duties if you paid out the full amount to the Participant? Most Plan Administrators who have received such actual knowledge refuse to make any distributions until the matter is resolved by the parties in court. OPM takes the position that if they know about a divorce and that's all, not if a COAP was entered or if a share of the Employee's FERS retirement annuity was to pass to the Former Spouse, the put a freeze on everything. How do they find out? Usually to Employee removes the Former Spouse from FEHB insurance and the reason is "divorce". That's all it takes. One of the questions you need to consider is whether or not you have a duty to investigate the information you have have in hand. Read the two DoL Advisory Opinions attached. I think you turn a blind eye to the situation at your peril. David Advisory Opinion 1992-17A - duty of Plan Admin.pdf Advisory Opinion 1999-13A _ U.S - Sham Divorces.pdf

The Plan Administrator must pay the money in the account the children pursuant to its own rules saying that the money goes to the children. Kari E. Kennedy, Executrix v. Plan Administrator for Dupont Savings and Investment Plan, 129 S.Ct. 865, 555 U.S. 285 (2009). But read Andochick v. Byrd, 709 F.3d 296 (2013) dealing with post-distribution recovery by an intended beneficiary. However, under the Pension Protection Act of 2006 it is possible for the former spouse to return to the state court and seek a posthumous QDRO awarding the PSP proceed to her. But a promise in an Agreement to name your former spouse as the beneficiary in not the equivalent to a transfer of retirement benefits to the former spouse that is enforceable under ERISA by use of a QDRO, so I have my doubts that the QDRO is an appropriate remedy. A QDRO would effectively change the nature of the language of the Agreement. BUT the children were never the intended beneficiaries of the account at any time. The former spouse was the intended beneficiary and since she cannot sue the Plan, she would have to sue her children as unintended beneficiaries under Andochick. Perhaps she needs to sue her attorney for malpractice. A very thorough explanation of this entire issue is set forth at Hennig v. DIDYK, Tex: Court of Appeals, 5th Dist., No. 05-13-00656-CV, (2014) - https://law.justia.com/cases/texas/fifth-court-of-appeals/2014/05-13-00656-cv.html And the Plan Administrator should do nothing, or at the very most file an interpleader action and ask the court what to do with the money, and let the court figure it out. David

I live in a world where nobody has the right to do anything unless that right is bestowed upon them by law or by regulations that have the force and effect of law. A court cannot require the parties to carry life insurance to protect the children because there is no statute that says that they can do so. Nor can the court order the parties to pay for college, for the same reason, the law does not authorize it. Certainly there are situations that a right is bestowed if not prohibited, including the 10th Amendment to the Constitution - "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." But ERISA and the DoL control every breath taken by plan administrators, no? So let's assume that the Plan Documents actually do provide that a spouse's status as a beneficiary of a defined contribution plan is terminated upon her death and that we are not dealing with a divorce and a QDRO, and that the Participant neglects to submit a change of beneficiary form. Where in ERISA does is the Plan authorized to strip the decedent and her estate of her status of beneficiary when Participant later dies without having changed the beneficiary? I cannot find that in ERISA or in DoL regs. These two cases are right on point. PaineWebber v. East, 363 Md. 408, 768 A.2d 1029 (2001), and Kari E. Kennedy, Executrix v. Plan Administrator for Dupont Savings and Investment Plan, 129 S.Ct. 865, 555 U.S. 285 (2009), but maybe those plans didn't have such a clause in their plan documents, or were they prohibited from having them by ????? David

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.