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QDRO - Time Limit For Filing


Guest ooota

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Guest ooota

Is anyone aware of a time limit for the filing of a QDRO in PA? I have been researching this issue and have not be able to come up with an answer.

Here's the scenario:

An employee is looking to retire and start drawing on his pension. He was divorced twelve years ago and his ex never sought entry of a QDRO. I believe the settlement agreement addresses division of his pension, however, I am not certain because a copy of the settlement agreement cannot be located. Any thoughts on what course of action he should take or not take?

Thank you in advance for your input.

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The purpose of the QDRO is to acknowledge the ex- spouse's rights to the pension. If there is no QDRO on record the employee can commence benefits without reduction. I dont think the ex spouse would have a right to the pension benefits if the QDRO was not approved prior to the time the benefits commence because of the doctrine of latches (unreasonable delay by spouse causes harm to the employee). This is different from a situation where the employee dies shortly after the divorce is issued but before a DRO can be presented to the plan admin.

mjb

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There may be no set time period. I do not practice in PA; however, one though to consider. If there was a court order originally which "reserved" jurisdiction, it seems that the Plan is on notice of that fact. I would be hesitant to advise the Plan it could distribute without making a good faith effort to notify the spouse that he/she has to file a QDRO within a reasonable period of time.

At the same time, I would be comfortable advising the Plan that it could start making payments to the Participant but reduce that payment by the former spouse's anticipated share. Then, if the spouse does not take any action within a reasonable period (I sometimes use the "18 month" period specified in REA and after warning him/her that a distribution will be made if no QDRO is entered, then I advise the Plan that a distribution can be made.

Dick

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Dick: In the absence of a QDRO your solution would constitute a forfeiture of vested benefits in violation of ERISA since a QDRO is one of the few exceptions to the requirement that a participant must be paid his vested benefits. There is also a case which holds that it is a violation of ERISA to withhold benefits in anticipation of DRO. The spouse may never appear because she is dead or does not want to pay for a QDRO. The plan has no obligation to track down a missing spouse and incur costs in the search to notify him/her of the impending payment because 12 years is a reasonable amount of time to file a DRO. Finally according to the facts no one is sure that the benefits were subject to divorce.

mjb

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Dick is correct if the settlement agreement was incorporated into the divorce decree or similar domestic relations order and the decree or other order were delivered to the plan. Upon receipt of a domestic relations order, the plan is required to protect the amount that would be payable to the alternate payee if the order is detemined to be qualified. Even if the order delivered to the plan is not qualified, the alternate payee would then have a reasonable time to achieve qualification.

The original post does not say the the plan received an order. Without a domestic relations order, the plan should proceed as usual with distributions. If the plan received an order that is not qualified, then questions about reasonable time to achieve qualification come up.

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