QDRO Formula - Increased Benefit

[Guest cosmo01]

We have a situation wherein an ex-spouse has submitted a QDRO. The formula, however, provides for a benefit distribution in excess of the benefits due the participant. The attorney for the ex-spouse is dragging this out. Is there any case that has the fact pattern of a formula which produces a benefit higher than what the participant herself is entitled to? I have found cases dealing with increased benefits that discuss the fact that a current spouse vests upon the participant's retirement, etc. Any more insight? Unfortunately, the attorney on the other side is not satisfied with the language in the statute. Suggestions? Comments?

Thank you

[QDROphile]

Why do you need to educate the lawyer, especially one who appears to be an idiot or worse? Just disqualify and give the reason (the statute) and be done. Plan administrators who try to help too much are asking for trouble.

If yours is a DC plan, consider educating the lawyer about the ability of the plan to charge expenses against the benefits of the troublemaker, but first give serious consideration to the fiduciary sensitivies involved with a subjective allocation and appropriate plan or procedure provisions.

A domestic relations order can qualify if it provides for benefits in excess of what the partiipant has accrued as long as the provisions assure that the amount that is actually paid to the AP is not more than is payable to the participant at the time of payment. In other words, the AP can capture future accruals, but only to the extent they actually accrue by the time of payment. Whether or not a state court would issue such an order is another matter. But your question does not seem to involve this issue.

[Kirk Maldonado]

cosmo01:

My recommendation is that you pay close attention to QDROphile's posting. You are getting some sage advice.

[Guest Kevin Wiggins]

How can the other side argue with the langauge of the statute? It says the DRO may not provide increased benefits measured on an actuarial basis. Period. Just show him the actuarial calculations and show why his formual requires increased benefits and reject the DRO.

Anyway, one case discusses a situation where the court analyzed the language of the statute. It came out in favor of the AP, but it may help you. Here is a summary which I cut and pasted from a QDRO outline of mine.

In Bailey v. New Orleans Steamship Ass’n, 100 F.3d 28 (5th Cir. 1996), the alternate payee submitted a DRO to the plan administrator after the participant’s death. At the time the alternate payee submitted the DRO, the participant’s widow was receiving a survivor benefit equal to $565.92 per month. The DRO assigned to the alternate payee a pension equal to $238.69 per month. The plan argued the DRO could in fact cause the plan to pay more benefits than it would without the DRO. The opinion does not clearly set forth the plan’s argument, but it appears the plan argued the alternate payee could live longer than actuarially anticipated and thus in fact result in a payment of increased benefits.

The district court reviewed the evidence and found that, on an actuarial basis, the amount of benefits to be paid to the widow and the alternate payee with the DRO was less than the benefits to be paid to the widow alone without the DRO due to the alternate payee’s shorter life expectancy. The court stated, “The fact that under some conceivable circumstances the benefits may, in reality, be increased under the QDRO is not meaningful as the statute only inquires into the actuarial value.” Bailey, 100 F.3d at 31. The Fifth Circuit affirmed the district court’s ruling with little comment other than to say that it “generally” agreed with the district court’s reasoning. Id., at 28.