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I have received a DRO for a participant who is only partially vested in a 401(k) plan. The DRO instructs that we value the vested and unvested portion of account as of a specific date in the past. And then if/as the Participant vests in the future, the AP will receive a proportionate share of that vesting. If the Participant doesn't vest, the AP doesn't receive any further funds. I am accustomed to qualifying the DRO and immediately segregating the assets, but I cannot give the AP unvested assets and then allow the AP to attain them as the Participant vests. And I cannot imagine trying to keep track and move half of the newly vested portion over each year as the Participant vests further. The risk of a recordkeeping error seems high. This feels like a problematic situation. The participant will not pay out from the vested portion and attorney indicates no other options. Would appreciate feedback as the only other DRO's I"ve dealt with were fully vested.
