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Nonvested Amounts/QDROs


Guest Jeff Kropp

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Guest Jeff Kropp

We have drafted model QDROs for our client to use, in order to ease administration. One issue that we had failed to address is when the participant is not fully vested in any or all of the amounts allocated to an alternate payee under the QDRO. We have proposed that to the extent the allocation includes nonvested amounts, the participant and the alternate payee will share equally in the vested portion of the account balance (in accordance with their remaining interest in the plan after the QDRO). This way, the alternate payee is not able to take a distribution of all vested amounts, leaving the participant with the nonvested amounts.

Also, we propose that if the allocation includes nonvested amounts, that no distribution of any amounts be permitted until the Participant becomes fully vested (or vesting can be determined with some certainty, as in a retirement or termination).

Any thoughts?

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