Jump to content

QDRO Horror Stories


Guest Kevin A. Wiggins

Recommended Posts

Guest Kevin A. Wiggins

I'm trying to gather a collection of QDRO horror stories. If anyone has any, could you please pass them on?

Link to comment
Share on other sites

You are going to share them, aren't you?

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.

Link to comment
Share on other sites

Guest Kevin A. Wiggins

If I get any!!! Has anyone, for example, had a plan administrator reject a QDRO for a typo, then had to go back to court, pay new filing fees, serve the other side, have a new hearing, etc., etc.?

Link to comment
Share on other sites

What about situation where divorce decreee is entered generally discussing wife's right to receive a benefit under the husband's defined benefit plan by filing QDRO with the court. Discussion is not specific enough to constitute a QDRO. Wife dies shortly thereafter without ever getting QDRO. Plan Administrator cannot honor the original decree language because it is not a QDRO nor any later QDRO issued to deceased wife or wife's estate because deceased spouse is not one of the categories of parties for whom QDROs can be issued.

Link to comment
Share on other sites

Guest oxdougw

Mine situation is part story, part question. An ex-husband (unemployed) received part of his ex-wife's plan balance. We have not made distribution yet because we are in the 60 day "objection" period. He has already fallen behind in child support payments. A DRO can be issued for part of his money still in the plan can't it for child support?

Link to comment
Share on other sites

  • 3 weeks later...

I gave a sample QDRO to the spouse of a participant, she needed it to take to her attorney. She brought it back for us to look at. It read exactly as the sample we gave her "......._____________________ (enter participant's name here)......". He charged her to correct it, so that it would include participant name, address, social security number, alternate payee name, etc etc - you know the basics. It was still wrong so we fixed it for her. No charge-she'd been through enough.

Link to comment
Share on other sites

  • 4 weeks later...

How about this for a horror story....

Been reviewing and re-reviewing a proposed DRO for a participant in a DB plan out on disability. The plan provides that a participant who is entitled to a disability retirement pension under the Social Security Act will be entitled to apply for a disability retirement pension under the plan commencing as of the first day of the month following or coincident with the date his disability pension from Social Security commences. The plan does not specify whether payments will include payments back to the date of disability determination. Although the participant went out on disability back in May, it can take quite a while to recieve a determination from Social Security and for benefits to commence. During this waiting period, the participant dies without proper language in the DRO naming the alternate payee as the surviving spouse for purposes of the QPSA, although it is his intention to provide her with this protection. We are trying to determine whether there is way that we can consider his benefit to have started as of the date Social Security determines that he was disabled, even though payments won't actually start under the plan until his Social Security benefits start.

Link to comment
Share on other sites

  • 3 weeks later...
Guest Blueglass

Check this out, the QDRO stated the Alt payee would receive an acutal dollar amount from the participants regardless if he took it early. He decided to take it early (reduced by 50%) and her benefit was UNREDUCED because it was an actual dollar amount! It was qualified.....

Participant Normal benefit

Example: $500 Benefit

Early: $250

AFter DRO:

$500 NRD

$200 Alt Payee Benefit

$300 Adjusted participant NRD

$150 Early Adjusted Participant NRD

She got $200 unreduced....where he only got $150 because he took an early retirement... Not sure if this is a horror story, but strange if you ask me...

Link to comment
Share on other sites

I think you just paid more than the plan permits.

You might also have a DRO with enough ambiguity to question whether it is qualified.

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.

Link to comment
Share on other sites

If alternate payee was enough older than participant such that $200 monthly payment just happened to be precisely actuarially equivalent to $200 deferred normal retirement payable to participant, then it would all work out and no overpayment took place. I think I just saw an angel dancing on the head of a pin, though.

Link to comment
Share on other sites

  • 2 weeks later...

Here's a truly ugly situation that I've seen before (more than once, unfortuately):

i. a married person designates his or her spouse as the beneficiary

ii. the couple gets divorced

iii. the divorce decree says that each waive all interest in the other’s property

iv. the beneficiary designation is never revoked

v. the participant dies (before getting remarried)

This one has a great potential to generate litigation.

Kirk Maldonado

Link to comment
Share on other sites

this is a horror story involving IRAs:

An IRA owned by a decedent designated his ex wife as the bene before they were divorced. Decedent did not change designation after divorce. Decedent was a resident of Hawaii which provides that upon divorce spouse beneficiary designation is automatically revoked. After IRA owner's death the ex spouse requested a distribution based on bene designation. Spouse received the IRA proceeds and rolled it over to her own IRA before executor for H's estate found out.

mjb

Link to comment
Share on other sites

Guest Kevin A. Wiggins

I was looking in particular for horror stories such as in a case where the plan administrator improperly rejects a DRO as a QDRO. I'll give you one example. The DRO said the name of the plan was the XYZ Partner's Plan. The plan administrator (or its agent) - a very prominant benefits consulting firm with offices in just about every major city in the US - came back and said, "Nope, the name of the plan is the XYZ Partners' Plan - no QDRO." The AP's choices were (1) go back to family court to get a new DRO with the name XYZ Partners' Plan, (2) commit fraud by using whiteout, or (3) sue the plan administrator for a declaratory judgment that the DRO qualified. (As most of you know, the DOL will rarely help with QDROs, if ever). The best option is (1), but required filing a new motion, serving the other side with process, going to a hearing and fighting about every argument the participant tried to raise, and court fees and attorneys fees out the proverbial wazoo - for absolutely no reason. (This was not my case, but I was shocked when I heard about it.)

Link to comment
Share on other sites

Guest Kevin A. Wiggins

Kirk:

If you have not seen it, See Keen v. Weaver, 2003 WL 21467100. If the waiver is specific, knowing, and voluntary, then it is effective (at least in my circuit) and, assuming there are no contingent beneficiaries, you fall back to the plan document.

Here is the next question. If the plan gives the PA discretion, is the standard of review for the PA's determination that the waiver is (or is not) specific, knowing and voluntary a de novo standard of review or abuse of discretion? If the PA is interpreting the divorce decree, then possibly de novo. If the PA is finding facts, depending on the circuit, then possibly abuse of discretion.

Does anyone have any thoughts?

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...