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QDRO re terminated plans


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I don't know how the DRO you have is worded, however, most I've seen related to a 401(k) plan simply state a dollar amount to be assigned to the AP. In this case, in my opinion, it would be irrelevant how the AP and attornies arrived at the dollar amount as long as there is enough money in the participant's account to cover the AP's portion assigned by the QDRO.

I feel our attornies would reject a DRO that mentioned moneys from a terminated plan and let the AP's attorney re-write the DRO.

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We received a DRO that relates to a current 401(k) plan and is attempting to assign benefits from the 401(k) to the AP, but also tries to calculate additional benefits based on account balances from terminated plans, also to be paid from the 401(k). The terminated plan assets were distributed long before the DRO was received. Can a DRO do this, assuming there is enough money to cover these amounts?

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Guest GregSelf

A DRO cannot require benefits not otherwise provided by the plan.

 Based on this, I'd say no.
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Guest GregSelf

Just realized my last post was pretty short. At the very least, given the possibility of circumstances of which I may not be aware, I'd defer the deterimination of the DRO to my ATTY's. But, barring any other particulars, I would guess the plan provisions don't cover this type of distribution. Ergo, I'd still say no.

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Partialy agree with Kip Kraus.

It seems unusual for a DRO to mention other plans (especially if terminated) but there is no reason that the DRO cannot use any other plans in the determination of the amount or percent to be assigned to AP.

However, I also see no reason for the DRO to even mention such prior plans, even if used in the determination. That seems equivalent to including your internal notes and workpapers in your final document.

Why not do the calculation, have it agreed to by the judge and/or other party, and put it in the DRO. The plan sponsor does not care what justification may have been used to arrive at the amount or percent of the award, as long as it meets the requirements of a QDRO.

BTW, I have seen a few QDRO's that award 100% to the AP. Probably a good guess that there was some behind the scenes negotiation (and horse trading) going on.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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Thanks for your comments. The other plans are terminated so I don't believe the AP can require us (under this DRO)to pull up the terminated plan records to calculate the amounts from the 401(k). If we do, the process will be time consuming and costly (we need the help of an actuary). The AP must provide either a percentage or dollar amount to be paid from the 401(k), and that amount must be calculated by the AP. Do you agree?

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Yes. the DRO should tell you what to do, not ask you to help decide what to do.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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