Can QDRO state that AP's benefits remain in the Participant's plan

[katieinny]

Certainly, there are situations where the Alternate Payee's benefits must remain in the Participant's plan until the "later of" date is reached, but if this plan allows for immediate distributions, can the QDRO specify that the assets shall remain in the plan until requested by the AP at some later date?

[GMK]

Generally, an Alternate Payee has the same choices as a participant. If a participant has options to choose to defer a distribution payment, the AP will have those same options. The QDRO cannot give the AP options that participants don't already have.

... unless I missed something here.

[katieinny]

Generally, if assets are above the $5,000 cash-out amount, you can't force a participant to take a distribution, so you're saying the AP can't be forced to take his/her money out either. I guess that makes sense.

[katieinny]

One further thought, though -- if there are per participant charges that are currently paid by participants, I assume the AP's account would be charged just as the other participants are.

[katieinny]

Another thought -- so if the plan permits loans, the AP could take a loan?

[GMK]

Yes, the Alternative Payees' account is usually expected to pay its share of the dues.

The Plan Document specifies who (employee, participant, beneficiary) is eligible for other transactions.

Whether or not others on this board provide their comments, I suggest that you prepare a list of questions specific to your plan to ask your plan counsel. And be sure to have your counsel review the DRO before it is proclaimed to be qualified.

[mbozek]

Generally, if assets are above the $5,000 cash-out amount, you can't force a participant to take a distribution, so you're saying the AP can't be forced to take his/her money out either. I guess that makes sense.

Where is the plan prohibiterd from cashing out an AP without consent? Reg. 1.411(a)-11©(6) provides that the consent requirements of IRC 411(a)(11) do not apply to an AP except as provided in a QDRO. Under Kennedy v. Dupont the terms of the plan control how benefits will be provided to an AP, not a DRO.

Also I dont see what the confilct is. If the plan allows immedate distribution by the AP, all the DRO apears to require is that the AP must request a distribution from the plan before benefits will be distributed.

I dont see why a plan has to provide a loan for an AP if the plan requires that all loans be repaid by payroll deduction.