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Privacy of Account Balance


Guest Calimayhew

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Guest Calimayhew

Our paralegal has been telling all alternate payees that the participant's account balance is confidential and that the plan administrator is not allowed to disclose any amounts without a subpoena directed it to do so. She says that this is federal law.

What is she talking about? Can anyone point me in the right direction?

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The Department of Labor publication "QDROs" encourages Plan Administrators to release information to potential Alternate Payees, including "individual benefit and account statements." It may help the drafting of a QDRO but the prudent thing is to always get the Participant's written consent before releasing any account balances.

For the DOL view, see Questions 2-1 and 2-5 at http://www.dol.gov/ebsa/publications/qdros.html

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I would qualify Harwood's response as being applicable to the time period when the DRO is being formulated ("potential" Alternate Payees). Such advice from the DOL should not apply to providing information to Alternate Payees at a later date, such as years after the QDRO is in place.

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What are the circumstances under which the AP is asking for this info? The AP will receive a financial statement stating the employee's retirement benefits as part of the divorce proceedings. In any event the court will make an award to the AP of the employees' benefits based upon the value as of the commencemnt of the divorce or the date of the divorce decree. If the AP is represented by counsel the plan admin should not talk to the AP.

mjb

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Guest Calimayhew

As background, we are the law firm that reviews and determines whether or not the DRO is a QDRO. Whenever a potential alternate payee contacts the plan administrator about getting a copy of the sample QDRO and the procedures, the PA refers them to us. Our paralegal tells any potential alternate payee (or counsel) that a subpoena is required before the participant's account balance will be released and that this is federal law. When I asked her to which specific law she was referring, she said the federal one. The conversation went downhill rather quickly.

Today, the attorney for an alternate payee challenged our assertion of federal law that protects the privacy of that information. The plan provides no guidance, stating that the Plan Administrator may disclose information necessary to administer the plan. I'm guessing that he won't accept our assertion of "the federal law" prohibits it.

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Since the financial information of the participant required to be disclosed in a divorce action includes all retirement benefits I think that the AP or his/her attorney is entitled to such information without a subpoena. (But this a matter of state civil practice law). In some states the participant is required to turn the information over to the AP's attorney as part of discovery. In other states the APs attorney can get an order requiring the employee to give permission to get it from the plan admin. I think the paralegal is relying on an ERISA provision that requires the plan admin to provide participants and beneficaries with information regarding their benefits upon request. However the DOL regards an AP as a benenficary. Perhaps the safest course is to inform the employee of the request for the value of the retirement benefits as part of the DRO notice with the notation that this information will be provided unless the ee objects. If the ee objects then the spouse's atty could get a ct order to require the employee to give consent.

mjb

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