QDRO & distribution to Alt Payee

[doombuggy]

I have been asked by a client to look over a DRO to see if it is qualified. Currently, it is not signed, so I consider it a draft.

It specifies a specific dollar amount, but no "as of" date. I used to do a lot of these but it's been awhile - shouldn't there be a date there (Amount of Benefit to be Paid to Alt Payee section).

The next section talks about timing and form of payment. The timing is fine ("as soon as practicable after the Order is qualified") but it just indicates that the "alt payee has elected to make a direct rollover into a qualified plan and directs the Plan Administrator to directly transfer her funds to [alt payee's name]'s IRA account at [alt payee's investment carrier]." Should an account number be listed here? The reason why I ask is b/c I have been told that a distribution form is not needed to process the distribution to the alt payee. Like I said, it's been awhile (at least 3 years) since I did a QDRO, and my thought is that she DOES need to complete a form so the trustee can sign it. The QDRO is not signed by the trustee (of course), but I think they need to sign off. Or does the fact that they deem it to be qualified is an automatic consent to the distribution.

Maybe I am thinking about this too much, but it is a lot of money, so I want it to be correct......

Thanks for your thoughts, guys.....

[Belgarath]

You may find this very helpful. And we always recommend that they consult their legal counsel.

http://www.dol.gov/ebsa/publications/qdros.html

[masteff]

Should an account number be listed here?

my thought is that she DOES need to complete a form

1) I doubt an account number is needed. It's only if the receiving trustee requires an account number that it would matter. Most qualified plan rollover request forms don't require one; all that's truly needed to make a direct rollover distribution is the name of the receiving plan/trustee and how the check should be payable.

2) What does the plan say? Our plans said you had to properly complete our prescribed form. Otherwise, you're on the right track of making sure the DRO has all the info that would be covered by the request form (not the least of which being the AP's signature). (Unless Belgrath's link contains info that would sway this answer one way or the other, I only skimmed it.)

[QDROphile]

A specified dollar amount is OK as long as the account has enough money at the time the amount is withdrawn to pay under the QDRO. Some plans, including all the plans run through evil Fidelity, cannot handle this rather simple task properly. The ability of the plan should be taken into account in its QDRO procedures and, if necessary, the order may have to be disqualified or paid according to a default provision under the QDRO procedures that determine a date for separating the funds and attributing earnings.

I never give effect to specific instructions in the order about rollovers. Distributions to an alternate payee must be done according to plan procedures. Then usual plan paperwork must be submitted by the alternate payee (or default procedures must be followed), and the 402(f) notice must be properly delivered. The alternate payee can elect a direct rollover under the plan's usual procedures. I take the "just do it" approach and would not disqualify the order. I would state in the notice of qualification that the plan will disregard the offending provisions about the rollover and state that the alternate payee's may elect istribution in accordance with plan terms. I am not saying that if a QDRO says distribute in a lump sump that the plan may allow the alternate payees to elect installments.

[doombuggy]

I actually have an older version of this info provided in belgarath's link (in book form).

The plan is valued quarterly, and as of 3/31/07, the partiicpant had more in his account that the order amount. I am thinking that perhaps the DRO needs to specify a date that is closer on actually a quarter end date? Lets say they go with the 3/31/07 - as it is now early June, the DRO would have to specify how to calulate earnings, or just call it a day? We are talking about $1.6 m here.....

I really think we need a distribution form. The plan allows for QDRO distribuitons at any time, and she is requesting a r/o which the plan allows (she will probably roll in-kind at the same investment carrier, State Street).