Can QDRO be structued as loan?

[Guest Willy235]

Assume a defined contribution plan that allows loans. If a domestic relations order provides that the plan will loan the alternate payee $200,000, can this be a QDRO? The main issue is, I believe, whether this arrangement violates the requirement of Code section 414(p)(3) that the order not require a "type or form of benefit . . . that is not otherwise permitted by the plan." The plan would permit a loan to the participant, but obviously couldn't do so for more than $50,000.

I don't think this works, but am interested in the opinion of others. Thanks.

[Belgarath]

FWIW - I agree - it shouldn't be a valid QDRO. Is the alternate payee by any chance the ex of a Trustee/Plan Administrator? If so, my increasingly suspicious mind might suspect the possibility of a sham divorce...

[Guest Willy235]

Thanks for your input. The alternate payee is the ex of a trustee, but there is nothing sham about this divorce, to put it mildly. It would obviously be much easier, not to mention clearly legal, to provide for straightforward payment to the alternate payee. In case you are wondering, the reasons to consider this more convoluted approach involves tax liens against the participant.