Benefits subject to QDRO

[Guest pjb]

I understand a QDRO can not split benefits that accrue after divorce. I have a pretty straight forward order for a DB plan providing 50% of the participant's payments when he retires and begins his payments.

On what basis is this not acceptable, disregarding optional forms and their effect on payment amounts?

Thanks

[QDROphile]

As a matter of federal law, your understanding is incorrect. All benefits can be assigned to an alternate payee, including benefits accrued after the divorce and after the order is determined to be qualified. The trick is defining what the assigned interest is, in accordance with the QDRO rules. Some incorrect court decisions that deal with related issues apply in certain jurisdictions until overruled.

State law is another matter, but something that is not allowed under sate law should never be in the order that reaches the plan, and the plan admiinistrator is not responsible for state law issues anyway.

If you want to disqualify the order (and I would), use section 414(p)(3)(A). The order provides for a benefit for the alternate payee for the life of another (the participant). I will bet that the plan does not offer a form of annuity that pays one person during the life of another person.

If you take this position, you will have to figure out how to reconcile what the plan will do if the participant starts an annuity (e.g. single life) and the plan later receives a domestic relations order that awards the alternate payee a portion of the payments or benefit.

[WDIK]

The order provides for a benefit for the alternate payee for the life of another (the participant). I will bet that the plan does not offer a form of annuity that pays one person during the life of another person.

I can see how the original post could be interpreted as you indicate, but my initial reading was that the AP would receive 50% of the retirement benefit (rather than 50% of the payments) and that the AP benefits would commence when the participant begins receiving payments.

Perhaps pjb could clarify.

[QDROphile]

If the order means what WDIK suggests, then it should be OK, subject to all the other requirements for qualification. I am always suspicious of "payments" as a synonym for "accrued benefit."