Post-retirement divorce & QDROs divesting ex-spouse of interest

[Guest jac]

If a participant begins receiving benefits as a jsa and then divorces his wife, may he get a QDRO terminating his ex-wife's right to a survivor anuuity? Ex-wife waived all interest in the pension in the divorce decree. I understand that if the participant dies now that his ex-wife will be entitled to the survivor annuity even though they are not presently married because they were married when he started his benefits. 1.401(a)-20 Q&A 25(B)(3) seems to suggest that a QDRO could provide otherwise. "If a participant dies after the annuity starting date, the spouse to whom the participant was married on the annuity starting date is entitled to the QJSA protection under the plan. The spouse is entitled to this protection (unless waived and consented to by such spouse) even if the participant and spouse are not married on the date of the participant's death, except as provided in a QDRO." I feel like I am missing something. QDROs clearly create, recognize, assign rights. Can a QDRO be used to divest an alternate payee of her interest in the survivor benefits if she agrees to that? (Participant understands he can't change his form of payment but just doesn't want ex-wife to get anything.) Thanks.

[QDROphile]

That provision, despite wrongly decided court cases, allows a former spouse to get a QDRO that taps into the survivor annuity after the participant has remarried and started benefits. The QDRO could provide something like "the alternate payee shall receive $100 per month for as long as benefits are paid to the participant or survivor."

A QDRO can make the survivor benefit go to an alternate payee. If you simply try to divest the survivor of the benefit, where does it go? It cannot go to the participant. If the survivor benefit can't go to someone else, why bother? The participant may act out of spite, but the plan should not.

If the benefit can't go somewhere that is legitimate and supported by authority, I would be disinclined to say that the former spouse can be divested at this point. Those wrong QDRO decisions say the survivor cannot be divested, even by a domestic relations order. See Hopkins v. AT&T Global, 105 F3d 153 (4th Cir. 1997).

[Guest jac]

Thanks, QDROphile. That's very helpful.

As for allowing a former spouse to get a QDRO after a participant and subsequent spouse have begun benefits, are there cases or other guidance I can look to on that issue? Now that you said that, it makes perfect sense but I'd like to look at more on it. Thanks.

I'm fairly new to QDROs and trying to learn as much as possible and gather as many resources as I can. This forum has already been helpful.

[QDROphile]

There are more cases after the Hopkins case. Most of them cite the Hopkins case, even when they disagree.

[RTK]

We work with a couple of db plans that include a provision that allows a participant who began to receive a pension in the form of a QJSA to receive a SLA pension after the annuity starting date if the participant divorces and the QDRO forecloses a claim by the spouse under the QJSA.

In the absence of a specific plan provision, I do not think that the QDRO can change the QJSA form of payment after the annuity starting date. Similarly, after the annuity starting date, I do not think that the QDRO can require payment of the pension in a form other than the form in effect on the annuity starting date (whether or not a QJSA).

[QDROphile]

RTK makes a good point. A plan can be designed to allow a form of benefit to be reformed under a QDRO. For example, a single life annuity could be reformed to provide two single life annuities, one for the participant and one for the alternate payee.

A literal reading of IRC section 414(p)(1)(A)(i) does not include taking away any interest of an alternate payee. It provides only for recognizing or creating or assigning an interest for the alternate payee. A literal reader would conclude that an order that tried to take away a survivor annuity interest fails to be a QDRO.

Are plan provisions effective if they allow allow a "QDRO" to reform a J&S annuity to provide a single life annuity? A determination letter does not cover whether or not a domestic relations order is qualified.

[RTK]

A clarification on my part. The db plans I work with that do permit a QJSA to be revoked after the annuity starting date under a QDRO would pay a SLA only to the participant. The plans would not pay a SLA to the alternate payee (in this case where the QDRO is presented after the annuity starting date).

Whether the QDRO would satisfy the QDRO requirements, I do not see a problem since it would not be providing for a form or type of benefit or option not otherwise provided by the plan.