fmsinc

Please read. https://www.planadviser.com/fidelity-goes-national-401k-income-annuity-offering/?utm_source=newsletter&utm_medium=email&utm_campaign=PAdash The law as it stands today is that a Participant in an ERISA qualified defined contribution Plan can take a distribution from the Plan without giving notice to or obtaining the consent of his/her spouse or former spouse. But the time when such a distribution can be made has always been defined as the time the Participant terminates employment with the Plan Sponsor (e.g. retires or is fired). I have always stressed to my colleagues at the Bar the importance of getting the QDRO entered by the Court at the same time that the JAD is entered and sending a certified copy to the Plan Administrator ASAP. I have always suggested that the moment they know that there is a pension or retirement benefit that will be addressed by the parties in an MSA or by the Court at trial, send every Plan Administrator (defined contribution or defined benefit) a Notice of Adverse Claim/Interest - see attached template and cover letter. Send a copy of the Complaint and a copy of draft QDROs. Plan Administrators are not required to take any action, but their lawyers usually suggest that, now that they have "actual notice", they don't want to find themselves involved in a lawsuit and should freeze everything in place until the parties have reached an agreement or the Court has entered a QDRO, vel non. Now Fidelity has a new product - Fidelity’s Guaranteed Income Direct, now available to Plan Sponsors nationally and applicable to 401(k), 403(b) and 457(b) Plans. Participants can purchase an income annuity directly through an employer’s plan benefit from a third-party insurer selected by the employer. The assets Participant's assets leave the retirement plan and go to the insurer for purchase, with monthly cash flow views available through the benefits platform, NetBenefits. The article doesn't mention the Secure 2.0 act that became effective on January 1, 2023, but it is consistent with what I have read. So let's say that the Participant retires and elects the new annuity option offered by Fidelity. The parties are still happily married. No divorce is on the horizon. But matters deteriorate and somebody files suit for divorce. Are the prospective Alternate Payee and the Court bound by the annuity option selected by the Participant? Can a QDRO supersede the annuity election and enter a QDRO awarding an immediately payable lump sum? Will that sponsor of the annuity, e.g. MetLife, Pacific Life, Prudential Financial and Western & Southern Financial Group, be required to accept and act in accordance with a QDRO? What if the Participant elects a 10 year life only annuity and dies 2 years later. Are the balance of the annuity payments wiped out thereby destroying what should have been the Alternate Payee's interest in the Plan benefits? Will the annuity contain the equivalent of survivor annuity benefits options and be treated like a QJSA in a defined benefit plan? I don't know the answers to any of these questions. But I can say with confidence that whoever drafted and enacted Secure 2.0 had zero experience in family law or in the allocation of defined contribution plans. Maybe some answers can be found at: - https://www.fidelity.com/annuities/overview?imm_pid=700000001009713&immid=100732_SEA&imm_eid=ep78286740705&utm_source=GOOGLE&utm_medium=paid_search&utm_account_id=700000001009713&utm_campaign=FLIA&utm_content=58700008578251620&utm_term=guaranteed+income+plan&utm_campaign_id=100732&utm_id=71700000115292309&gad_source=1&gclid=Cj0KCQiAqsitBhDlARIsAGMR1Rh1PyZfQVskEw0lmOAxtS99Cr3vuwZ2vfGwuQ5eP6C5UtR8aKQcnHAaAnUsEALw_wcB&gclsrc=aw.ds David Notice of Adverse Claim-Interest.pdf Notice of Adverse Claim- Interest Cover Letter (2).pdf

Jakyasar: The statute defined "real estate agents" and "direct seller". The people who work for a broker in any other capacity are almost certainly employees. That would include the secretarial staff and a marketing manager who is not compensated as set forth in the statute. There are people who work for brokers that handle advertising and marketing materials like VistaPrint Booklets Brochures Business Cards Forms Checks Door Hangers Flyers Gift Card Holders Key Card Holders Magnets Table Tents Packaging Insert Cards Custom Postcards Presentation Folders Whose job is it to make decisions about the employment status of someone like this? A Plan Sponsor is at risk if he/she makes the wrong choice. "Employees" get 7.65% employer contributions to FICA and Medicare, the same health insurance and pension benefits as the other "employees", Worker's Comp coverage, sick leave and annual leave and all of the other fringe benefits. Independent contractors get none of them. Realtors tell you that the R in their logo stands for "Republican". That that may provide understanding of how section3508 came to be enacted during the Presidency or Ronald Reagan.

Here is my legal opinion and my opinion as a real estate broker since 1974: Real estate agents are classified as independent contractors by Federal law. See 26 USC 3508 at https://www.law.cornell.edu/uscode/text/26/3508 and see https://www.nar.realtor/advocacy/nar-issue-brief-real-estate-professionals-classification-as-independent-contractors I see no evidence that this code provision was changed by the new DoL FLS Rule that you can find at https://www.federalregister.gov/documents/2024/01/10/2024-00067/employee-or-independent-contractor-classification-under-the-fair-labor-standards-act

Your local court system will usually pay a very paltry fee to a juror, sometimes as little as $15 an day. Payments by an employer for the time that an employee is on jury duty is not extra compensation, it's just compensation for time that an employee would otherwise be at work but is not. Compensation is what shows up on the final W-2 at the end of the year. If an employee has a salary of $50,000 a year and 4 days of his time during the year is spent on jury duty, his salary is still $50,000 a year. Like annual leave or sick leave or compassionately leave etc. I Don't understand how a plan can exclude that sort of fringe benefit.

Are you suggesting that in a defined contribution plan you can structure the plan to permit rollovers to an IRA or other eligible retirement account while the Participant is still in the employ of the Plan Sponsor? I assume you are not talking about loans or hardship distributions. David

26 USC 414(p)(2) provides: “(2) Order must clearly specify certain facts - A domestic relations order meets the requirements of this paragraph only if such order clearly specifies— “(A) the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order, “(B) the amount or percentage of the participant’s benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined, “(C) the number of payments or period to which such order applies, and “(D) each plan to which such order applies." That is all you need to have in a QDRO for it to be acceptable to the Plan Administrator. See Festini-Steele v. Exxonmobil Corporation, No. 20-1052, __F.App'x__, 2021 WL 629755 (10th Cir. Feb. 18, 2021) that you can find at - https://scholar.google.com/scholar_case?case=9213427610449703594&q=Festini-Steele+v.+Exxonmobil+Corporation&hl=en&as_sdt=20000003 The Plan Administrator may want more information, and I always give it to them, but technically it's not required. But that does not seem to be your problem. You obviously have a defined contribution plan and need to change the name of the Plan and the Plan Administrators, but the need to adjust for gains and losses is the problem. I have had many cases where the entry of a QDRO was delayed for many year, often 10 or 20 years or more and during that time the Plan Administrator changed. When I asked for their QDRO package pursuant to ERISA Section 206(d)(3)(G)(ii), they advised me that the Valuation Date from which gains, losses and investment experience were to be computed could not be prior to the date the new Plan Administrator took over. The explained quite logically that they did not have the information to make those calculations. Keep in mind that I was not usually talking to the actual Plan Administrator, an employee of the Plan Sponsor, but to a Third Party Administrator (TPA) like Fidelity or MassMutual or Voya or Vanguard or WTW. What do do? I could just use the date the new TPA took over and leave it at that. If the market value of the assets in the Plan had decreased, that would be best for the Alternate Payee. I don't know that I had any other option in dealing with the new TPA. I could tell the client to sue his former attorney (assuming he had one) for malpractice and report him to the State Grievance Commission for a violation of the Rules of Professional Conduct (competence). Failure to process a QDRO is a timely manner will get you sued every time. The problem will be how to compute the damages, that is, the gains, losses and investment experience from the Valuation Date set forth in the original Marital Settlement Agreement (MSA) or, in the absence of the MSA, in the Judgment of Absolute Divorce (JAD), to the new TPA take over date. One method is to take the value of the account as of the original Valuation date and use an average of the Dow Jones, NASDAQ, S&P 500 and Moody’s bond rate each month year to bring that amount up to the date of the new TPA take over. Then the gains and losses would be computed from that date to the date of rollover or distribution to the Alternate Payee. There is authority for that approach in Maryland in the case of Reynolds v. Reynolds, 216 Md. App. 205, 85 A. 3d 350 (2014) where the appellate court held that: "We agree that a trial court could, in principle, attribute a reasonable rate of return to assets, and that the rate on U.S. Treasuries would be a conservative estimate of returns for nearly any asset." The Treasury rate tends to be a little low, but I have have used a financial analyst at UBS to make such a computation. Not perfect, but it wasn't much money and it saved litigation costs. See attached. If you are negotiating with the malpractice carrier for the negligent attorney you will find that they will settle rather that run the risk of a nisi prius (lower court) or appellate judgment. DSG 01-19-2024 Smith Case Growth Computation..pdf

Dianna912: There are about 40,000 defined benefit plans (pensions) in the US. Most are covered by ERISA. They do not all work the same was. Every plan has a Plan Document setting forth what they can and cannot do. They must comply with ERISA. State laws governing the allocation of pension benefits are not uniform and a state court cannot order the Plan Administrator to do anything that is not permitted by ERISA or by the Plan Document. Federal law preempts State law. People sign Marital Settlement Agreements ("MSA") and agree on various allocations of benefits. In the absence of an MSA the Court will issue a Judgment of Absolute Divorce ("JAD") and allocate the pension normally based on what the Judge deems to be equitable. In order to provide you with a valid and intelligent response to your questions, a competent attorney who specialized in QDRO matters need to know/see: 1. The exact name of the Plan. You cannot simply say "Lockheed Martin" since that company has dozens of pension plans for different classes of employees and for many companies that it has acquired or with which it has merges over the last decades. 2. A copy of the MSA if any. 3. A copy the JAD. 4. A copy of the QDRO. 5. All correspondence with the Plan Administrator. Unfortunately you may have misstated the identity of the parties. If in fact is was a separate interest allocation, then the Participant (who you said died some years ago) would have the right to name a new spouse to receive a survivor annuity benefit with respect to that portion of his retirement annuity that was not transferred to the Alternate Payee as the Alternate Payee's separate interest. But in most separate interest allocations the Plan documents do not permit the Alternate Payee to name a survivor annuity benefit for a new spouse when she dies. The normal language you will see in the QDRO will say something like this with respect to the Alternate Payee's receipt of her separate interest in the Participant's retirement annuity: "The Alternate Payee may elect to receive his or her vested benefit in any optional form permitted for Alternate Payees by the Plan in effect at the Alternate Payee’s commencement except that the Alternate Payee may not elect to receive: (i) a level income annuity option or, (ii) a qualified joint and survivor annuity with a subsequent spouse." A separate interest allocation severs the relationship between the parties. The Alternate Payee can start to draw his/her separate interest even if the Participant had not retired, subject however to what we cal the age 50 rule, that is, the Participant must be over age 50 and be eligible to retire and that normally takes place at age 55. So the bottom line is that the Alternate Payee in your case is not entitled to any survivor benefits that are payable as a result of the Participant's death unless the Participant named the Alternate Payee to receive them. However many property drafted QDRO will negate that possibility by expressly saying that any previous elect of the Alternate Payee (the former spouse) is void. It often happens that people forget to change beneficiaries of their retirement plans and life insurance and that can lead to expensive litigation. DSG 01-18-24

Jack Stevenson: Does the JAD specify the percentage survivor annuity amount? It can be from $1.00 a month to a maximum of 50% of the amount of your self only annuity. If it is not addressed CFR default at OPM is the maximum amount. Does the JAD specify who pays for the cost of the survivor annuity? In not, then the CFR default at OPM is that YOU, the employee, pay the full amount. So if your retirement annuity is $6187/month, the maximum survivor annuity is $3,094/month, the cost of the survivor annuity will be $619/month and will be taken from YOUR share of the retirement annuity. On top of everything else, if the JAD did not reserve jurisdiction for the court to enter the QDRO, it may not be able to do so at all. DSG

The language of the QDRO will reflect the agreement of the parties if there is one, or if not, the language of the court in the judgment of absolute divorce. So you are not talking about a matter of law. You are talking about a matter of what was agreed to by the parties or mandated by the trial judge. Aside from that, the survivor annuity benefit, which is what you were really talking about, is usually less than the amount of the retirement benefit. Most plans mandate what is known as a 50% joint and survivor benefit, but some plans permit the parties to agree, or the court to award, anywhere from 33% to 50% to 66% to 75% to 100% of the full amount of the retirement annuity. What this means is that in most cases the amount payable to the former spouse will be necessarily less than the full amount of the retirement annuity and will more closely approximate the amount she was likely receiving as her marital share during the joint lives of the parties. If you multiply 50% by the coverture fraction, it may reduce it by another 50%. On I'm not aware of any law, rule or regulation that requires the parties to actually sign off on a QDRO. Most jurisdictions treat a QDRO as an enforcement tool, like a garnishment or an attachment. We normally put approvals on the QDRO not because it's required but as a matter of courtesy to the other counsel. The Department of Labor has a pamphlet that specifically says that signatures by the parties are not required. Would anyone seriously expect a judgment debtor to be asked to sign a document that attaches his assets or garnishes his pay? Of course not. File a motion for entry of the QDRO I've done so on many times and the judge has never refused to do so. If you have any questions feel free to call me at 301-947-0500. David

https://www.thetaxadviser.com/issues/2021/may/tax-issues-noncompete-agreements.html

If the divorce decree was entered in Maryland, as Mr. Stevenson has said in his previous posts, the answer is that his ex-wife will be entitled to 50% of the marital share of his retirement annuity, but not his survivor annuity benefits. In Maryland there is a case, Potts v. Potts, decided in 2002 that is very clear and it's holding that if you do not mention specifically survivor annuity benefits in the agreement of the parties, or in the judgment of absolute divorce, the former spouse/alternate pay does not receive them. If ex-wife is planning to submit a QDRO to the court at this late date, you have to make sure that she does not include survivor annuity benefits. THE QUOTED LANGUAGE NOT ONLY DOES NOT REFER TO SURVIVOR ANNUITY BENEFITS, EVEN IF IT DID, IT DOES NOT REFER TO THE PERCENTAGE OF SURVIVOR ANNUITY BENEFITS TO WHICH SHE WOULD BE ENTITLED OR WHICH PARTY WOULD PAY THE COST OF SUCH BENEFITS OR WOULD SUCH COST BE ALLOCATED BETWEEN THEM. SINCE MR STEVENSON SUGGESTS THAT HIS DIVORCE DATES BACK PRIOR TO 2002 THERE WILL BE A QUESTION OF WHETHER OR NOT THE POTTS CASE IS RETROACTIVE TO HIS CASE OR NOT. If Mr Stevenson is serious about protecting his rights he needs to hire an attorney right now. He is not going to find all of the the answers he needs on this blog or be able to represent himself with the little knowledge he has about these matters. DSG

Your lawyer is wrong. Read my email of last Friday.

First of all, I don't know what you mean by saying "during the ask". And I don't understand the timeline you were talking about, when the court did what or said what and when your ex-wife is making a demand. If you actually want me to take a look at this, I need to see a copy of the agreement and the judgment absolute divorce and that will tell me pretty much everything I need to know. It generally doesn't matter where you earned the 401k or any other pension or retirement plan. It only matters in what state the divorce was granted and how the allocation of pension and retirement benefits are treated in that state. If the If the agreement or the judgment of divorce did not mention the 401k and more than 30 days have elapsed since the entry of the judgment of absolute divorce, your ex-wife is likely SOL. David. 301-947-0500 I have been a member of the Maryland Bar for 56 years during which I have spent 37 years preparing qualified domestic relations orders, teaching matters pertaining to pension and retirement plans and testifying as an expert witness on these issues.

See my previous response to your other post. If survivor benefits were not specifically mentioned by the JAD, your ex- will NOT receive. It is difficult to answer questions without seeing the exact language of the JAD.

You are in luck Mr. Stevenson since I am a Maryland attorney. 1st: The case of Potts v. Potts decided in 2002 held that survivor benefits are a form or marital property separate and apart from retirement annuity to which it is attached, and that that if the Agreement of the parties or the Judgment of Absolute Divorce (JAD) do not specifically mention survivor annuity benefits, the former spouse does not get them.....period, full stop. 2nd: It is never too late to file a QDRO in Maryland. The same Potts case held: ""We have found no case, statute, or rule in Maryland or elsewhere that requires a QDRO to be filed within a specific time frame after a judgment of absolute divorce has been entered. Therefore, the timing of the presentation of the QDRO is dependent on the diligence of the parties and their counsel or the assertiveness of the trial court." So yes, she can file these QDROs even at this late date. 3rd: With regard to your pension plan, the JAD likely gave her 50% of the "marital portion" of your pension, if , as and when you receive it. So the formula would be 50% of the gross amount of your monthly pension multiplied by a fraction, the numerator of which is the number of months of creditable service toward retirement earned during the marriage, and the denominator of which is the total number of months of creditable service toward retirement earned at the the time of your retirement. It may not be as much as you think. Another possible issue impacting the survivor annuity in Federal plans, e.g., FERS or CSRS, is whether or not she remarried prior to age 55. 4th: As far as the 401(k) is concerned, the issue will be whether or not the amount she receives will be locked into the amount or percentage set forth in the JAD or whether her share will be adjusted for gains, losses and investment experience from the valuation date to the date of actual transfer to her. I would have to see the JAD to comment further on that. Bottom line: Do now be surprised if the Plan Administrator puts a hold on your benefits. Their ass is on the line and they do not want to make a mistake. You can reach me at 301-947-0500 in Gaithersburg. David S. Goldberg www.familymediator.com

I misread the question. I took it to mean that the participant had died, in which event the PPA of 2006 will enable a posthumous QDRO to be submitted and qualified. But Peter Gulia is correct that the estate of the Alternate Payee who predeceases the Participant is not "Alternate Payee" per ERISA § 206(d)(3)(K). A survivor annuity is only payable to an Alternate Payee who survives the Participant's death - be definition. This is not the situation addressed in the discussion on April 11, 2019. See .

What kind of Plan, defined contribution or defined benefit. Pursuant to what law, ERISA, US Military, CSRS, FERS and other Plans administered by OPM, State, County or Municipal Plan, Union Plan, Church Plan, International Plan. Did the Court specifically award survivor annuity benefits. Is this matter pending in a case where if the court does not specifically award survivor annuity benefits the former spouse will not receive them....period, full stop? Like Maryland per the 2002 Potts v. Potts case. If you are referring to an ERISA qualified defined benefit plan and if survivor annuity benefits are subsumed into whatever language is in the Judgment of Divorce, then you are in luck. See my attached Memo that gives you two avenues of attack, the Pension Protection Act of 2006 that permits the post-mortem/posthumous entry of a QDRO, and the concept of "nunc pro tunc". Some states have permitted posthumous EDROs with respect to State pension plans that are not ERISA qualified. Post Morten and Nunc Pro Tunc Memo.pdf David

If you take a distribution the payment is taxable income. You cannot take a loan from a NQDC plan and you cannot roll over a distribution to an IRA or other eligible retirement account. I would read: https://www.fidelity.com/viewpoints/retirement/nqdc and https://www.fidelity.com/viewpoints/retirement/nqdc-part-2

The first questions are: (i) was the QDRO was submitted to the trial judge; (ii) was it signed by the trial judge; (iii) was a certified copy submitted to the Plan Administrator; (iv) was the QDRO approved by the Plan Administrator. You need to check the Courthouse file and with your attorney and with the Plan Administrator for the answer to these questions. The next question is what benefits are you talking about. You will normally have a share of your ex-husband's retirement benefits and that will normally not terminate on his remarriage or your remarriage unless that outcome is set forth in the QDRO or is a requirement of the underlying Plan documents. You should be able to contact the Plan Administrator and ask them if you will still receive your share of his retirement benefits and if any events could change that outcome. You may also be entitled to a survivor benefit (that you will receive after his death) if that is set forth in the QDRO, however in the case of survivor annuity you can lose your entitlement if: (i) you remarry; or (ii) you remarry prior to a certain age, usually 55; (iii) or if he remarries. It will all depend on the language of the QDRO and the underlying Plan document, and once again you should be able to find out the answers from the Plan Administrator. Many municipal plans for police, firefighters or correctional officers do not provide for survivor annuity benefits for former spouses, unless the employee retired during the marriage and elected such survivor annuity benefits and if such election survives the divorce pursuant to the plan documents. Once again, the Plan Administrator will be able to help you. You need to know that Plan Administrators owe a fiduciary duty to the employee/Participant and to the former spouse/Alternate Payee so they should answer any questions you may have. Note that employees of the City seem to contribute to 4 plans: Municipal Employees' Annuity & Benefit Fund of Chicago (MEABF) Laborers' & Retirement Board Employees' Annuity & Benefit Fund (LABF) Policemen’s Annuity & Benefit Fund Firemen's Annuity & Benefit Fund so you need to know exactly what plan is involved and that should be set forth in the Court Order. See this page - https://www.chicago.gov/city/en/depts/fin/supp_info/pension_funds.html Note that the Court Order is not a "QDRO" but a Qualified Illinois Domestic Relations Order (QILDRO). See the attached pamphlet that describes more the 4 plans. Also find attached a QILDRO Booklet and a Model QILDRO Order. Also a Fact Sheet that describes more than the four plans mentioned above. I hope this is helpful. DSG 11-20-23 QILDRO_BOOKLET_20211019 (1).pdf QILDRO_FORMS_2012_04.pdf QIDDRO - Chicago.pdf

Peter. My local (Montgomery County, Maryland) buddies agree with you even though none of them have ever seen a direct distribution from a Roth account. Thanks for your help. David Goldberg

The court awarded my client a percentage share of her ex-husband's 401(k) account. It turns out that abut 90% of his 401(k) are in a Roth funds. I am working on the QDRO. She plans to take a taxable distribution since she needs the money now. If the distribution was coming from a traditional pre-tax 401(k) it would be income taxable to her and the Plan would withhold 20% for Federal taxes, and there would be no 10% premature withdrawal penalty under IRC 72(t)(2)(C). Since it's a Roth account, will she have to pay income taxes on a direct distribution, or will it be tax free? 72(t)(C) provides that an exception to the imposition of the 10% penalty under 72(t)(1) includes: "(C)Payments to alternate payees pursuant to qualified domestic relations orders: Any distribution to an alternate payee pursuant to a qualified domestic relations order (within the meaning of section 414(p)(1))." So one would surmise that the 10% penalty will not apply to the Roth distribution. I guess she could take a loan or make a hardship withdrawals if she is disabled, or she can just wait until age 59-1/2. What do you think? Any creative ideas? David

The court awarded my client a percentage share of her ex-husband's 401(k) account. It turns out that abut 90% of his 401(k) are in a Roth funds. She plans to take a taxable distribution since she needs the money now. If the distribution was coming from a traditional pre-tax 401(k) it would be income taxable to her and the Plan would withhold 20% for Federal taxes, and there would be no 10% premature withdrawal penalty under IRC 72(t)(2)(C). Since it's a Roth account, will she have to pay income taxes on a direct distribution, or will it be tax free? 72(t)(C) provides that an exception to the imposition of the 10% penalty under 72(t)(1) includes: "(C)Payments to alternate payees pursuant to qualified domestic relations orders: Any distribution to an alternate payee pursuant to a qualified domestic relations order (within the meaning of section 414(p)(1))." So one would surmise that the 10% penalty will not apply to the Roth distribution. I guess she could take a loan or make a hardship withdrawals if she is disabled, or she can just wait until age 59-1/2. What do you think? Any creative ideas? David

I am assuming you are talking about a defined contribution plan. I am assuming that the divorce is final, and that the QDRO was signed by the Court. and that a certified copy of the QDRO and was sent to the Plan Administrator, and that the Plan Administrator approved the QDRO, and that no appeal of the Divorce Decree was filed by either party. If I am incorrect in any of these assumption, let me know. A timeline is essential. Some states provide that the court will lose jurisdiction to modify (including a recission) a QDRO within a certain number of days after the entry of the QDRO (e.g. after the time to revise a Court Order has expired), or after the expiration of the applicable statute of limitation that can be many years down the road. Res judicata will apply. Some states will not permit a modification (including a rescission) of a QDRO under any circumstance if it changes the terms of the underlying Divorce Decree. Res judicata will apply. Some states will permit a modification (including a rescission) of a QDRO even though it changes the terms of the underlying Divorce Decree but only if the Court has reserved jurisdiction in the Divorce Decree to do so. Some states view a QDRO as the source of the obligation to transfer pension and retirement assets from one party to the other. Other states view a QDRO as a tool, like an attachment or a garnishment, to enforce the Divorce Decree. The ability to modify it or rescind it will differ depending how they view it. I found this online: "The question of whether retirement savings plans, such as IRAs, 401(k)s, and pensions, impact Medicaid eligibility is complicated. There are no federally set rules on these plans and Medicaid eligibility; each state sets its own rules. Adding to the complexity are other variables, such as the type of retirement savings plan, payout status, payout amount, one’s other income and assets, and marital status. "The bad news is that it is likely an applicant’s retirement savings plan will be considered by Medicaid as either income or an asset when determining eligibility for long-term care. The good news is that most candidates can still gain Medicaid eligibility and preserve some or all of their savings for a spouse or another family member. "In states that consider a Medicaid applicant’s retirement savings account as an asset, it will count against Medicaid’s asset limit for eligibility. Some states will exempt one’s retirement account if it is in payout status, and therefore generating income. However, the payments are considered as income and will count against Medicaid’s income limit for eligibility. While this does not automatically mean the candidate will be Medicaid-ineligible, this is common because Medicaid’s income and asset limits are so low." You need to check with the eligibility requirements for Medicaid in the jurisdiction in which she resides. It may not be as onerous as she imagines. It may be that she can elect to take her 401(k) as an annuity. The payments will count as income, but the total amount will not impact Medicaid eligibility. And it may only impact long term care eligibility. See - https://www.medicaidplanningassistance.org/medicaid-eligibility-401k-ira/#:~:text=California%2C Florida%2C Georgia%2C and,payments are counted as income. Good luck, DSG

Many plans have a list of beneficiaries in none is named, such as: (i) Surviving spouse, (ii) Children in equal shares, (iii) Surviving parents in equal shares, (iv) Estate. If the plan does not such a list then the money goes to the estate of the decedent and the probate court will determine who gets it. This is not an uncommon event. It might be prudent to check and see if the employee was divorced and whether or not a QDRO was issued, or whether the Judgment of Divorce or the Judgment of Divorce incorporation a Marital Settlement Agreement exists. Under the Pension Protection Act of 2006 a post mortem QDRO can be entered. David

If you don't have a QDRO in hand then you have no right or obligation to investigate whether or not some person out there is entitled to retirement or survivor annuity benefits. See the attached DoL Advisory Opinions. BUT If the Participant retired during the marriage he would have been required by the REA - 29 USC Section 1055(a)(d) that you can find at https://www.law.cornell.edu/uscode/text/29/1055#:~:text=§ 1055-,29 U.S. Code § 1055 - Requirement of joint and,annuity and preretirement survivor annuity&text=in the case of a vested participant who dies before,surviving spouse of such participant. [and see attached from the Internal Revenue Manual Section 4.72.9.3.5 and see ERISA § 205(a)-(d), and see 26 CFR § 1.401(a)-20 - answer 25(b)(3). If an employee retires while still married, the spouse will receive a survivor annuity (unless waived by the spouse) and no subsequent divorce will undo that mandatory election regardless of whether or not the parties or the judge have addressed it in the divorce proceeding.] to name his then spouse to receive a QJSA and a QPSA, and that election would survive a later divorce, unless the spouse affirmatively waived such benefits. If you have the documents he submitted at the time of retirement you should have the answer to his problem if his divorce occurred after that date. The spouse is covered for survivor annuity benefits per 29 USC 1055 and not by reason of a QDRO that is preempted by Federal law, BUT only for a share of his survivor benefits and but not for a share of his retirement annuity benefits during his lifetime. That would require a QDRO. The fact that he did not tell you he was divorced makes no difference if the QJSA and QPSA were locked in at his retirement. Let's hope you have his retirement application that would show a waiver, but even if you don't, you have the law on your side. David Advisory Opinion 1992-17A - duty of Plan Admin.pdf Advisory Opinion 1999-13A _ U.S - Sham Divorces.pdf DoL Advisory Opinion 1990-46A.pdf IRS Manual section 4.92.9.3.5.pdf