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Typical QDRO Procedure - MSA?


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Question for all of you that work with QDRO's more frequently than I do: I am an associate attorney, and at a previous firm, I did a fair amount of QDRO review for employer - basically I advised whether the submitted DRO's (sometimes in draft form, sometimes already signed by the court) were "qualified." On occasion, I also assisted a divorce attorney in drafting DROs (or reviewing them) for divorcing clients. It is my memory that, when working for the divorcing party, I always reviewed the Marital Settlement Agreement (MSA) or divorce decree, to ensure that the QDRO reflected the correct division of retirement assets. However, I don't recall regularly seeing (or requesting) the MSA when doing QDRO review for the Plan Administrator/Employer.

Now I'm at a new firm, and there is more QDRO work now coming my way from two Plan Administrator clients. My supervising attorney here says that it has always been his practice to request the MSA as part of the QDRO review for Plan Administrator clients.

My thinking is that the divorcing party's attorney has the responsibility to ensure that the DRO, as drafted, comports with the MSA, and that the Plan Administrator's review is more properly limited to the extent that the QDRO satisfies the requirements of 414(p) and comports with permissible payment terms under the relevant plan.

My boss, on the other hand, says that the Plan Administrator is responsible for administering the Plan, and that this INCLUDES being sure that the QDRO, as drafted, comports with the MSA.

Seems to me that it may be tricky to always request an MSA copy, especially in the case of proposed versions of QDROs.

Any thoughts out there? Is his preference to ALWAYS see a copy of the MSA quite usual and reasonable? It seems to me to go a little too far, but I'm willing to be corrected.

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Since the MSA or some related document can be a domestic relations order, you always have to determine what constitutes the domestic relations order that is being proposed for qualification. Is it a single document or is it a combination of documents? For example, some documents expressly incorporate the terms of another; some documents incorporate by implication. You have to consider all the terms of the order, whatever you determine the order to be. My policy is to try to limit the potential for confusion because of multiple documents and I take a very agressive position against any effect of another document. In the determination I define the document that is the order. If any other doucment is referred to or submitted with that order, I expressly provide that the terms of the other documents have not been taken into account and shall have no effect (if that was not what was intended, they can appeal the determination). I want to stay within the four corners of a single document if possible. Sometimes it is not possible, depending on how the documents are drafted. You have to apply your judgment, so no single answer applies in all cases, but I think your boss's policy is at the dangerous extreme and I think it makes for more work than your clients should have to pay for. In particular, I completely disagree with the idea that the plan administrator's job includes reconciliation of a proposed QDRO with any underlying or preceding order; that is a matter for state law, not qualification or administration requirements. In fact, the plan administrator has no right to request any other document or information. The plan administrator reviews what is presented. If something essential is missing, the plan administrator identifies what is missing based on what is presented. How the gap gets filled is not up to the plan administrator. Digging deeper is asking for trouble. You can find cases that take overactive plan administrators to task.

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The advice rendered by the attorney for the plan admin is to make sure that the QDRO does not violate IRC 414(p) and the plan provisions e.g. , form or date of commencement, not review the terms or benefits awarded under the divorce. Most divorce decrees and property settlements do not provide much detail as to the benefit rights granted to the AP which is negotiated by the attorneys before the DRO is approved by the ct. Frequently attorneys for the parties want the plan admin to make decisions on the benefits which is not permitted since the Plan admin must not favor one side. I dont see any reason for counsel for the plan to compare the MSA to the QDRO because its not the job of the Plan admin to interpret the divorce documents since the plan admin has no liability to the parties in applying the terms of the QDRO that their attorneys agreed to. (I dont see how the MSA is a plan document.) Your problem is more political than legal in that you work for an attorney who believes that the Plan admin must review the benefit provisions of the divorce documents. Q what would your boss do if he thought that the DRO was inconsistent with the MSA? Require the terms of the DRO to be changed after the ct agreed to it?

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The only time we would request anything other than the DRO is when an outside agreement is specifically incorporated into the DRO & review of that outside agreement is specifically pertinent to the divison of retirement plan benefits.

We are small, we only look at maybe 9 or 10 DRO's a year, but in my 10 years I can only remember one time where I had to look to something outside the DRO.

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