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It's a QDRO!!! Oops, just kidding . . .


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Okay--it's a fairly complicated segregation, but it is legal and "do-able"--I won't go into the gory details. Attorney for plan gave it his blessing and actually provided some revised language to the attorney for P to clarify some points. Third Party Administrator/Trustee consulted its legal dept and also confirmed it was fine. Now the DRO is signed by all parties and entered in the court. Attorney for the Plan received the DRO and notified all parties that it was qualified. The plan then directed the 3rd Party Administrator/Trustee to segregate the accounts. 3rd Party Administrator now says that it is not administratively feasible/possible to do it as set forth in the QDRO. Now what? Can we now reject the QDRO and ask for revisions? Or, can we go to the P and the AP and have them sign something which indicates the actual dollar amounts (determined in accordance with the QDRO) they are to receive? Trustee will proceed with dollar amounts. They just don't "get" the segregation formula. Otherwise, Trustee wants a new QDRO. Help?

LKP

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The participant and alternate payee cannot simply agree to a modification. You can get them to confirm that the number arrived at through the calculation is correct or within their expectations and intent, if the calculation is ambiguous or reasonably disputable. If they have any disagreement, that won't help.

Someone has the authority to interpret and determine qualification. That person is probably not the TPA, because interpretation and determination are fiduciary functions. How strange is it? Why can't the fiduciary tell the TPA the numbers, whether or not the TPA agrees with the interpretation? If the TPA is a fiduciary and has the authority, then the TPA/fiduciary should be controlling the communications and can do what it wants and will have responsibility for what it does.

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I think that the fiduciary won't be able to tell the TPA the numbers because everyone expects the TPA to determine the numbers. It is number-crunching that no one wants to do.

I am in a similar situation, but the order has not been deemed qualified by the plan sponsor. As TPA, we noted when we saw the draft dro that it would be difficult to administer. Now the order is signed and I will tell the plan sponsor and attorney again that it is going to take a lot of time to segregate the accounts. I do not expect anyone to change the terms of the order; that's just the way it goes.

The order specifies that the account be segregated 50/50 as of a day more than 1 year ago. The account is contained in six or seven individual brokerage accounts that contain several hundred individual stocks, plus life insurance. The date chosen to segregate accounts is not a month-end, and the trustee has no record of those security prices at that date. The account was not frozen on that date, so there has most likely been activity in the account since then.

I don't think the drafters of these orders (MPP and PSP) took the time to look past the 50/50 split. The alternate payee can have absolutely no idea of how much money she would receive if the balances were split tomorrow.

No questions, just commiserating. Will accept any suggestions.

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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.

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Let's boil it down to this. DRO already determined to be a QDRO by the Plan/Employer (employer's attorney) and all parties have been notified. TPA is given the QDRO to segregate the account and they say they can't do it (even though they looked at it before and gave it the "green light"). What are the options? I wouldn't think you'd have to get a new QDRO, but it may be the best thing to do, to clarify the segregation. And no, QDROphile, I wasn't suggesting that the P and AP agree to a modification--I was simply suggesting that they agree to the amounts determined by the employer/attorney (under the terms of the QDRO)--then the numbers can be given to the TPA (thus simplifying the whole thing for the confused TPA). What d'ya think?

LKP

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If the fiduciary with responsibility for QDROs has interpreted the order and arrived at the number, then it is a lovely idea to get the participant and alternate payee to confirm that they agree with the interpretation. Agreement can be obtained expressly or implicitly. Just like in school, it is probably best for the presentation to explain or show how the fiduciary arrived at the result. All the better if the terms of the order are ambiguous or otherwise difficult. If they disagree, then the fiduciary can disqualify, even if the fiduciary has previously qualified, based on latent ambiguity or other issues with the interpretation. If both parties don't agree with an interpretation, one or both are wrong, and the fiduciary may be wrong, so it is reasonable to disqualify so they can go back and fix it.

Answering your question is a bit difficult without detail, but that is the nature of the message boards.

ALL determinations of qualification should be conditioned on the interpretation of the fiduciary, and the fiduciary should state interpretations when appropriate. If there is a quarrel with the interpretation, then the fiduciary can disqualify and let them work it out.

I will spare you my usual comments about how the company should have no part in fiduciary functions. Oops. But what does the lawyer involved in the first place say to all of this now?

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Thanks, QDROphile. That's pretty much what I wanted to hear--that's how we wanted to proceed.

The attorney representing the plan administrator (company) doesn't understand what is so hard about the segregation and doesn't know why the trustee can't do it.

LKP

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