Participant's former wife is awarded half of his interest in his qualified plan by a QDRO. Is she now a participant and entitled to a SPD ..etc...?

[Guest Moe Howard2]

A QDRO awarded half of participant's entire investment to his former wife. Now she receives an annual investment statement from the plan each year. That's right, the statement is in her name only.

Does this mean that she is a participant entitled to a SPD? Can she request a copy of the plan document (just like any real bonafide participant can)?

She presently has no idea if the plan is an ERISA 404© plan. Is the plan required to give her something in writing which explains if the plan is 404© plan?

She called the plan's 1-800 phone number and was told that she has no control over how the plan invests her account funds. The person she spoke to said he wasn't familiar with the word "ERISA". So obviously, she didn't speak to anyone of authority or knowledge.

Here's my questions:

1) I realize that if a plan is an ERISA 404©, then such must be stated in the plan document .... but it's not required to be in the SPD (according to the DOL's list of things that are required to be in the SPD). So how does she find out if the plan is a 404© plan, other than calling the plan and speaking to a receptionist?

2) If it is a 404© plan, then must she too be afforded the priviledge of selecting how she wants her account invested .... or does she not have that right because of the way in which she acquired the account (via a QDRO).

Note: Her ex-husband is still employed by the plan's sponsor.

[Guest Grabitquick]

She's a "beneficiary" for ERISA purposes--see ERISA Sec. 206(d)(3)(J). Thus, she has basically the same right to receive copies of the plan, SPD, etc. as any participant.

Regarding her right to direct investments, look to the terms of the QDRO. If the QDRO provided that her account was to be segregated from the participant's account (which sounds like it might be the case here), participants' have the right to direct the investment of their accounts and the QDRO gives her the same right as plan participants to direct the investment of her own segregated account, then that answers the question--she should be allowed to direct her investments. The plan does not have to be a so-called "404© plan" in order to allow participants to direct investments, although most plans that allow participant direction nowadays are 404© plans.

[WDIK]

Is the plan required to give her something in writing which explains if the plan is 404© plan?

You might want to refer to the section entitled "Information That Must Be Provided" at this site.

[mbozek]

Ther is no requirment that the AP be allowed to participate in the plan. Most Dc plans provide for the AP to recieve a Lump sum and can require that a lump sum distribution be paid upon approval of the QDRO to exclude the AP.

[Guest Moe Howard2]

mbozek,

You say that "Most DC plans provide ..."

Most?? (Does that mean like greater than 50% ?).

Most?? Are you sure? How in the world would you know something like that?

Have you seen a survey of the USA's DC plans which states that?

Why would you say "most" if you don't really know that to be true?

[Harwood]

Virtually all employers/sponsors want to get Alternate Payee money out of the plan. So every prototype document I have seen has a clause allowing an Alternate Payee to take an immediate distribution at any time, if authorized by the QDRO.

[mbozek]

I say most because all of the DC plans that I have seen permit cashing out the AP and under reg 1.411(a)-11(b)(6) the cashout does not require the APs consent. I dont seen any reason for a DC plan to allow the AP to remain in the plan as a beneficiary because of fid issues, plan loans, MRD and other rights required under ERISA.

[Guest Kevin A. Wiggins]

Mbozek:

What if the QDRO says the plan must get the AP's consent. Can the plan still force the AP out?