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QRDO Order


Guest GordyK

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Guest GordyK

Attorney drafted an order had it signed by all parties and approved by court. It contains a formula requiring benefits to be calculated based on date of marriage to date of separation (September 3, 1998 to June 4, 2004). I explained the problem with this and he is having a CPA do the calcs. OK with me.

When the CPA comes up with the number, my recommendation will be that all parties sign off on the number and how the assets are to be separated (order calls for the administrator to make a determination).

I think this second agreement should be incorporated into the QDRO. Should it go back to the court for approval as a addendum to the original QDRO?

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I am assuming you represent the plan in some capacity. I am also assuming from your post that the "problem," as you put it, is that the existing order is subject to varying interpretations. If that is the case, I believe the plan's interests (in avoiding tax disqualification or a later claim for more benefits) are protected if both parties to the order and their counsel sign off on a letter agreeing to a particular interpretation of the order that is consistent with the QDRO rules, but let me stress only if both counsel sign off. If one or both parties does not have counsel, make them go back to court to get a new order.

If this is more than just a question of interpretation of the order, for example, the order is requiring something to be done that violates the QDRO rules, I would refuse to honor the order and make them go back to court and get a good QDRO.

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I don't think the "in-between" position of informal agreement is efficient and it may not be effective either. The more efficient approach is to include the interpretation in the notice of qualification, with copies to the lawyers. If someone does not like it, the interpretation can be appealed to the plan administrator or the order can be modified. Chances are the the parties had no precise benefit in mind, were only working from a general concept and they won't even know of an alternative to ask for. Do it my way and you are probably done. The other way, you have more work and the parties will still be clueless about the actual benefit and alternatives, and thant can generate even more aggravation. Make sure the interpretation is very clear (use numbers), especially if it is a shocking result, such as the former spouse gets nothing if the participant dies because the order fails to award any death benefit.

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