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NQDC and qdros


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Technically, not if the plan is a top hat plan, which most are. Section 206 of ERISA does not apply; neither does 414(p) of the Internal Revenue Code. But the plan may allow for it and is not required to use the QDRO rules. The interesting question is whether state law will purport to force it if the plan does not allow it (California does). The IRS seems to say that a division under a domestice relations oder will not cause tax problems, at least in community property states.

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Thank you. I've asked around and it seems more than a few plans allow for a distribution in these cases, and I agree it doesn't have to be a qdro, just a dro.

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