Post-Annuity Start Date QDRO & California Judge

[Guest AEAllen]

I am new to QDROs and would be grateful for any insights.

Before Worker retired, a DRO was submitted to his plan on behalf of his ex-wife. The Plan determined that it was not a QDRO.

Worker retires, begins pay status. Plan Administrator notifies ex-wife that appropriate amounts would be segregated and withheld for up to 18 months or until a QDRO is received, or the amounts would go to Worker. Nearly two years pass and Segregated amounts are released by the plan to Worker.

Three months later, State Court Judge says that Worker must surrender the segregated amounts which were paid to Worker and give them to his ex-wife.

Is this correct?

[Mike Preston]

I am new to QDROs and would be grateful for any insights.

Before Worker retired, a DRO was submitted to his plan on behalf of his ex-wife. The Plan determined that it was not a QDRO.

Worker retires, begins pay status. Plan Administrator notifies ex-wife that appropriate amounts would be segregated and withheld for up to 18 months or until a QDRO is received, or the amounts would go to Worker. Nearly two years pass and Segregated amounts are released by the plan to Worker.

Three months later, State Court Judge says that Worker must surrender the segregated amounts which were paid to Worker and give them to his ex-wife.

Is this correct?

State courts have almost no limitations when it comes to fashioning their orders. Whether their orders are fair or not is something for the attorneys representing the individuals to decide. So, there is no "correct" answer to your question.

[Guest AEAllen]

Thanks for the speedy reply.

A better phrasing of my question would be -- Does this comport with ERISA section 206?

[david rigby]

Does this comport with ERISA section 206?

If the monies have been paid from the plan, why is Sec. 206 relevant?

[Mike Preston]

Thanks for the speedy reply.

A better phrasing of my question would be -- Does this comport with ERISA section 206?

An apt question, indeed. I suppose it goes to the question of what the specific order says. If it says that "THE monies received must be turned over." (and those monies are identifiable, which is not an easy thing to establish), then I might argue 206 is violated by the order.

However, if it says "An amount, equal to that which was received, must be turned over." then I would argue that such a remedy is perfectly acceptable. Note that acceptable does not mean or imply that fairness. Just that I find it more likely than not that a federal court would not step in on the basis of the state court stomping on ERISA.

Of course, what *I* would argue is irrelevant because I'm not a lawyer. FWIW.

[Guest mjb]

Thanks for the speedy reply.

A better phrasing of my question would be -- Does this comport with ERISA section 206?

An apt question, indeed. I suppose it goes to the question of what the specific order says. If it says that "THE monies received must be turned over." (and those monies are identifiable, which is not an easy thing to establish), then I might argue 206 is violated by the order.

However, if it says "An amount, equal to that which was received, must be turned over." then I would argue that such a remedy is perfectly acceptable. Note that acceptable does not mean or imply that fairness. Just that I find it more likely than not that a federal court would not step in on the basis of the state court stomping on ERISA.

Of course, what *I* would argue is irrelevant because I'm not a lawyer. FWIW.

ERISA 206(d) only protects plan assets while they are held in the plan. After distribution benefits are subject to seizure like any other property unless state law would prevent seizure.

[Mike Preston]

Since the days of Guidry that issue has been hotly debated. I still say that if the state order says that THE proceeds are to be turned over upon receipt that there is controversy over the ability to enforce same.

[Guest mjb]

Since the days of Guidry that issue has been hotly debated. I still say that if the state order says that THE proceeds are to be turned over upon receipt that there is controversy over the ability to enforce same.

I dont know what Guidry case you are talking about, but in Guidry v. Sheetmetal Workers (Guidy III), 39 F3d 1078, the Tenth Circut ruled as follows: "ERISA 206(d)(1) protects ERISA qualified benefits from garnishment only until received by the plan participants or beneficaries". The 9th Circuit court of appeals allowed seizure of benefits after reciept by a participant in Wright v. Rivland, 219 F3d 905.

In Trucking Employees of North Jersey Welfare Funds v. Coleville, 16 F3d 52, 56 the 3rd Circuit concluded that ERISA 206(d)(1) only applies to actions against the plan not to actions against the participant or beneficiary.