chris Posted September 20, 2002 Posted September 20, 2002 Participant in a PSP recently got separated from spouse. A separation agreement was signed and other spouse relinquished all rights,..., in participant's PSP benefits. Participant now wants to change the beneficiary designation. I looked at Reg 1.401(a)(20), Q & A 27, which states in part ..."if the spouse is legally separated or the participant has been abandoned (within the meaning of local law) and the participant has a court order to such effect, spousal consent is not required unless a QDRO provides otherwise." Does the "court order" language apply to the separation or to the abandonment, or both?? Also, I guess one would need to look at what "legally separated" means with respect to any one state's domestic law.....????
david rigby Posted September 20, 2002 Posted September 20, 2002 Non-lawyer opinion. "Legally separated" means a court is involved. A couple can get "separated", even with a "signed separation agreement" without going to court, but the term in the reg. is intentional, and to make sure it has a judge behind it. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
chris Posted September 20, 2002 Author Posted September 20, 2002 That's basically what I thought. I found a 2nd Circuit case on point which gave a grammar lesson on that Q & A in the Reg..... The case is [The Board of Trustees of the Equity-League Pension Trust Fund v. Royce, 2001 U.S. App. LEXIS 561 (2d Cir. 2001)] For a copy: https://www.tourolaw.edu/FTP/SecondCircuit/...y01/99-9123.rtf
2muchstress Posted September 20, 2002 Posted September 20, 2002 Both responses are correct. You cannot be "legally separated" until a judge signs the order. Any separation other than a "legal separation" would be meaningless as far as qualified plans are concerned.
2muchstress Posted September 20, 2002 Posted September 20, 2002 Well, okay I misspoke. Any separation other than a "legal separation" or divorce would be meaningless......
mbozek Posted September 20, 2002 Posted September 20, 2002 2much: It has been a while since I reviewed it, but I believe that a separation agreement does not require a judicial order in all states. Some states permit the parties to enter into a legal separation pursuant to a written agreement signed by the parties. See IRC 71(B)(2). As far as I know divorce and separation are not covered under federal law but are governed entirely by state law. The use of the term "legally separated" is intended to require that the separation be in accordance with state law in order to prevent a sham distribution of plan assets under the guise of a separation, not that a judge must approve the separation order. mjb
2muchstress Posted September 20, 2002 Posted September 20, 2002 Without reviewing any regulations, my response was based on information from S. Derrin Watson's ASPA Webcast and his book 'Who's the Employer". When it comes to these issues, I believe Derrin's word is the word of God. Although, after reading these threads for a while, I have also learned that you too, mbozek, are a reliable source of info. However, it is all together possible that the term legally separated is more restrictive when it pertains to family attribution rules (Derrin's forte), than when it pertains to beneficiary designations. Although I must reiterate, and the point was pounded clearly, over and over in the ASPA webcast that legal separation is declared by a judge.
david rigby Posted September 20, 2002 Posted September 20, 2002 How about the phrase quoted above: "...and the participant has a court order to such effect..."? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
chris Posted September 20, 2002 Author Posted September 20, 2002 Th 2d Circuit case referred to above held that the language in the Reg. "and the participant has a court order to such effect" applied to both legally separated and to the abandonment under local law. The court stated that if the intent was to require a court order only as to the abandonment prong then the court order language would've been enclosed within the parenthesis..... Granted, domestic/family law is a state law issue.....???
mbozek Posted September 20, 2002 Posted September 20, 2002 Whether or not there needs to be a court order for separation is a matter to be determined by counsel. However, many state allow legal separation to be created by agreement between the parties without a court order because of the cost of a court approved separation. However, abandoment must be sanctioned by a court order because there are varous proofs and affirmations required by the party allegeding abandoment. therefore the regulations can be read as requiring a ct order only for abandonment. mjb
chris Posted September 22, 2002 Author Posted September 22, 2002 ....as long as you don't live in a state within the 2d. Circuit?
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