Interpleader 1099-R Question

[Guest ToddieBear]

Background:

1) plan participant divorced

2) a QDRO was drafted

3) plan participant died

4) the QDRO was then submitted to the plan administrator

5) the decedent-participant's estate claims the funds as does the alternate payee

The qualified DC plan has instituted an interpleader action. It intends to pay the account balance to a U.S. District Court, which will then decide who gets the money.

A few questions come up:

1) Normally a 1099-R would have to be issued, but does it in this situation, and if so to whom? (I see on the instructions to the 1099-R that if the payment would be exempt from tax no 1099-R need be issued.)

2) Is interpleader even permitted under these circumstances, and if so would the plan have to specifically provide for such an ability?

Thanks for any help.

[Guest b2kates]

Interpleader seems appropriate. In past I have dealt with similar situation. We were the bank trustee.

We took the position that the funds paid into court were still in trust and that the final order; after appeals had expired, then was an order of distribution and

Plan was then responsible for the reporting to recipient's on 1099s.

If you wish to discuss drop me a note.