Statute of Limitations

[dmwe]

We were informed of a DRO from 1983 (maybe even before QDRO guidelines) that was never handled by lawyer, plan administrator or recordkeeper. Participant balance has just recently been rolled over to an IRA. Ex-spouse is finally bringing up that part of it belongs to her.

Has she waited too long to get this handled? Is there a time frame in which she must act to claim an alternate payee benefit?

[david rigby]

REA was passed 08/23/1984. QDRO did not exist prior to that.

[Guest Sieve]

Domestic relations courts have continuing jurisdiction over divorces, so that a QDRO can be entered long after the divorce is finalized. And, of course, the plan administrator has no obligation to assume there is a QDRO and should therefore be held harmless if a distribution is made without knolwedge of a QDRO.

I would suspect that the old DRO did not meet QDRO requirements, in any event. But, if it did, it could be considered a QDRO even though entered into before the QDRO effective date. But, in this case, the alternate payee is out of luck, because no QDRO was presented prior to the distribution to the participant and the PA had no knowledge. (Whether the alternate payee can go after the spoouse for breaching the divorce decree is a separate issue dependent on state law, of is no consequence to the PA.)

[Guest mjb]

We were informed of a DRO from 1983 (maybe even before QDRO guidelines) that was never handled by lawyer, plan administrator or recordkeeper. Participant balance has just recently been rolled over to an IRA. Ex-spouse is finally bringing up that part of it belongs to her.

Has she waited too long to get this handled? Is there a time frame in which she must act to claim an alternate payee benefit?

Dwme:

Are you saying that the plan received the DRO in 1983 but it was never acted on? Or are you saying that the DRO was never received by any of the parties to the plan in 1983 but has been filed recently? If the DRO was received by the plan prior to January 1, 1985 the plan was not required to acept it as a qdro.

If the DRO was received recently from the ex spouse the following rules apply:

1. Under IRC 414(p)(1)(A) a QDRO can only be issued if creates the right of an ex spouse to receive benefits of a plan participant under the plan. If the plan has paid out the benefits to the employee before the plan receives the DRO no QDRO can be issued. It doesnt matter if the DRO would not meet the requirements of a QDRO under IRC 414(p) because the plan holds no assets for the employee.

2. If the plan pays out the benefits to the employee, the ex spouse can enforce right to benefits under the divorce decree in state court. If the funds are rolled over to an IRA the state court can order that assets in the employee's IRA be transferred to the ex in a tax free transfer under IRC 408(d)(6).

3. Whether the spouse can enforce her rights under a DRO from 1983 in state court will depend on the statute of limitations for bringing an action to enforce rights under the DRO. If the DRO was incorporated in a property settlement the S/l may be the period of time for bring an action as a breach of contract which is usually about 6 years. If the DRO was part of the divorce decree/ court order the s/l to bring an action is the s/l to enforce a judgment. Most states place a limitation on the how long a party has to commence an action to enforce a judgement from 10 to 20 years.

[QDROphile]

State law statutes of limitation are none of the plan's buisness in the first instance. If the plan got the order before distribution of assets, then it should process it one way or another, with a bias toward qualification. If it got the order after distribution, then the order is ineffective as far as the plan is concerned. If the participant does not like the plan's determination, the participant can step in and raise various objections during the time after notice and before the determination is given effect, includig an objection that the order is no longer effective under state law.

[Guest mjb]

State law statutes of limitation are none of the plan's buisness in the first instance. If the plan got the order before distribution of assets, then it should process it one way or another, with a bias toward qualification. If it got the order after distribution, then the order is ineffective as far as the plan is concerned. If the participant does not like the plan's determination, the participant can step in and raise various objections during the time after notice and before the determination is given effect, includig an objection that the order is no longer effective under state law.

Where did I say in #3 of my prior post that the s/l was the plan's business? If the DRO was received by the plan prior to 1/1/85 there is no requirement under 414(p) that the plan accept it and pay benefits to the AP. The AP has no recourse against the plan for paying benefits to the employee if the DRO was submitted prior to 1/1/85 or after the benefits were paid to the employee and her only recourse would be to sue the employee in state court for the benefit rolled over to an IRA to enforce the divorce decree/DRO if the s/l for enforcing a judgment has not expired.

[QDROphile]

I was not contradicting anything, I was clarifying. Your response was overflowing with information relevant to the ultimate outcome between the two individuals, but not all of that information was relevant to the plan. In fact, the plan could go astray if it considered and tried to apply all of the information and conclusions you offered; the plan can't resolve all the issues for everyone. Nothing wrong with the response, but each player needs a different filter.