Alternate Payees in DC plans vs. DB Plans

[Guest Ken_Systems]

Are AP's rights in DC plans based on the participant who earned the benefit, as in DB Plans? I have seen DC plans where the AP's money was commingled with their own money, when both parties were participants in the same plan.

[QDROphile]

It is better practice to treat alternate payees who are also participants the same way that nonparticipant alternate payees are treated. So an account or subacount separate from the alternate payee's participant account should be established. The rules governing alternate payees are different and the QDRO may have terms that cause the QDRO money to be handled differently. Examples: Alternate payees are not subject to a 10% tax on withdrawal of QDRO money before age 59 1/2; alternate payees usually can get a distribution right away (the alternate payee, as a participant, may not be able to get in-sevice witdrawals); alternate payees often must start distributions when the participant starts; if the plan has a j&s annuity distribution option, the QDRO money can't be distributed as a j&s annuity (unless the former spouse is the named survivor beneficiary, which is unusual). Depends on what you mean by commingle, but the plan had better be able to identify the QDRO money and its related earnings.