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QDRO re: 401(a)


Guest Darlene Malaney

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Guest Darlene Malaney

Does a distribution to an ex-spouse have to be made at the direction of a Qualified Domestic Relations Order, or can a distribution be made to an ex-spouse based on a Final Judgment of Dissolution of Marriage/Marital Settlement Agreement?

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In the context of a governmental plan, the assignment and alienation rules do not apply, so in theory a plan could provide for division of benefits pursuant to a settlement agreement. However, if this were done, the agreement would not be a domestic relations order for federal tax purposes, so the employee (not the alternate payee) would be taxed on the distribution. As a practical matter, it has been my experience that either applicable state or local law or the plan document always requires a court order, rather than just a settlement agreement ratified by the parties. However, a Final Judgment of Dissolution of Marriage/Marital Settlement Agreement can be a domestic relations order if it is issued by a court or incorporated by reference into a court order (which would typically be the case).

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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