Interpretation of word "accumulated" in QDRO

[Guest Chelsi]

The judge signed a QDRO directed to my ex's deferred compensation plan. The judge stated that the alternate payee's share is:

"fifty percent (50%) of the Participant's account value that accumulated between February 21, 1991 and September 30, 2005, together with earnings or losses, as determined by the Plan, until such time as the account is established for the alternate payee."

Since the judge used the word "accumulated", I took that to mean that he was including all interest earned between those 2 dates and that this also included the interest on my ex's pre-marital portion.

The fund disagreed and interepreted it to mean that my ex is entitled to have the interest/earnings/losses portion on his pre-marital share that was earned during the marriage. They also stated that they couldn't do calculations of interest from years 1991-1994.

The Fund had no statements for m ex's pre-marital amount so they said without that they couldn't implement the QDRO. I had a statement for the quarter ending 12/31/90 and asked them if it would help with calculations if I sent it. My ex did not have this statement. The only record the fund had of my ex's contributions was the actual amount he contributed for years 1989 through 1991, which was less than the amount on the statement I had.

I sent them the statement and the Fund said it would try to do calculations.

What should I do if I do not agree with their calculations?

Should I have just let the fund reject it and submit a new QDRO to the judge with similar language:

"fifty percent (50%) of the Participant's account value that accumulated between February 21, 1991 and September 30, 2005, minus the amount of the Particiant's actual contributions before Feb 21, 1991, together with earnings or losses, as determined by the Plan, until such time as the account is established for the alternate payee."

Does anyone have an opinion on this?

[rcline46]

Having been supplied with such convoluted language in the past, we flat out reject such DROs as being impossible to interpret. Why not use plain English? For Example:

The interest of the alternate payee will be 50% of the contributions to the plan plus any earnings or losses on said contributions between date1 and date2, said amount to be adjusted by any gains or losses on said amount from date2 until distribution or segregation.

It is far better to actually SAY what you mean, than to let lawyers gobbledygook it all up.

[Bird]

Yeah, it's best to be as specific as possible and even better, do the calcs and agree on them before the QDRO is issued so it can just say "X" (plus earnings). As you've already learned, records are often missing and it becomes impossible for "someone else" to calculate what you thought was a "fair" split.

FWIW, if pressed, I would interpret the order to exclude earnings on the pre-marital portion.

[masteff]

1) I agree w/ the plan's interpretation re: the division of interest. "Accumulated" is a semi-jargon word in the financial/accounting profession and therefore potentially different from your personal expectation. As rcline said, if you revise, use different words.

2) You still have one fatal flaw... the plan does not, nor will ever have, the balance as of 2/21/91. In my former job, I'd recommend rejecting your DRO because the plan can't physically comply w/ the calculation required.

I agree w/ Bird. You should either 1) specify what exact $ amount to use for the starting figure or 2) just do the calc yourself and remove any guess work from the plan sponsor.

So either:

The interest of the alternate payee will be 50% of the difference between $starting_amount and the account balance as of date2, said amount to be adjusted by any gains or losses on said amount from date2 until distribution or segregation.

or:

The interest of the alternate payee will be $exact_amount as of date2, said amount to be adjusted by any gains or losses on said amount from date2 until distribution or segregation.

[Guest Chelsi]

I gave the Fund my ex's statement as of 12-31-90, and the marriage date is 2-21-91. The fund said it would try to do calculations, but as you pointed out, we don't know what happened in the account between 12-31-90 and 2-21-91. My ex could have withdrawn money and here he would be given credit for money he may have withdrawn. My ex did not even have this statement and I gave it to the fund hoping it could be resolved since they have incopmplete from back then.

Their records show his yearly contributions for years 1989, 1990, 1991 and so on until the present. They said he entered the fund in 1987, but that they had no records from those years. Their records show that from 1989 to Feb 1991 he contributed approx. $6,500. The 12-31-90 statement I have shows about $11,400.

Should I just let the fund reject the QDRO and submit a new one with the first option you suggested and just take the figure off the statement I have, submit it to the judge and use that as the amount for the starting point in the QDRO?

The fund is very picky about the language used in the QDRO.

By the way, my ex won't agree to anything. He has been hostile throughout the whole process and won't even pay child support and medical support for our son.

[Mike Preston]

You might want to consider having the DRO prepared/modifed based on getting your medical support from the plan. Check with a lawyer in your state for how that works.

[Bird]

Should I just let the fund reject the QDRO and submit a new one with the first option you suggested and just take the figure off the statement I have, submit it to the judge and use that as the amount for the starting point in the QDRO?

It's tough to say; at some point you might want to be expedient and just take whatever number someone comes up with, or as Mike notes, take a different approach and try to get it expanded - ask for the moon while you're at it and see what happens.

By the way, my ex won't agree to anything. He has been hostile throughout the whole process and won't even pay child support and medical support for our son.

And there's the problem with our "ideal" scenarios.

[Guest Chelsi]

1) I agree w/ the plan's interpretation re: the division of interest. "Accumulated" is a semi-jargon word in the financial/accounting profession and therefore potentially different from your personal expectation. As rcline said, if you revise, use different words.

2) You still have one fatal flaw... the plan does not, nor will ever have, the balance as of 2/21/91. In my former job, I'd recommend rejecting your DRO because the plan can't physically comply w/ the calculation required.

I agree w/ Bird. You should either 1) specify what exact $ amount to use for the starting figure or 2) just do the calc yourself and remove any guess work from the plan sponsor.

So either:

The interest of the alternate payee will be 50% of the difference between $starting_amount and the account balance as of date2, said amount to be adjusted by any gains or losses on said amount from date2 until distribution or segregation.

or:

The interest of the alternate payee will be $exact_amount as of date2, said amount to be adjusted by any gains or losses on said amount from date2 until distribution or segregation.

Even though I faxed a copy of a statement dated as of Dec. 31, 1990 which was before the date of marriage in Feb. 1991, can I use a different figure for the starting amount in example #1 above? I got the amount off a letter that the fund sent to my ex itemizing his yearly contributions to the fund. My ex forwarded this letter to me. A rep. from the fund asked me why I wasn't using the figure off the Dec. 31, 1990 statement.

Since the fund has no statements, they can't actually "authenticate" the Dec. 31, 1990 statement copy I faxed them. So why would they even think that it should be used if they can't confirm the numbers in the statement? They still can't prove the amount on the date of marriage on Feb. 21, 1991 either, so isn't that statement useless?

Does the fund have a say in what figure I use for the starting figure or should their only concern be whether or not the QDRO can be implemented?

When I submit the QDRO to the court,I will also submit it to my ex and his attorney. They will have a chance to contest the QDRO.

My ex did not contest the first QDRO that I submitted to the court, which stated that the alternate payee would receive "50% of the Participant's fund balance as of Sept. 30, 2005" He used the same language in a QDRO against my fund and I did not object either. When the judge changed the language and required the fund to do calculations, that where the problems arose.

The fund also told me they have no records of interest earned or losses from 1991 to 1994.

I am just afraid the fund will try to tell me what numbers for the starting figure to put in my QDRO, when I do not think they should.

Does anyone know what should I tell the fund if they do that?

[GMK]

FWIW, I believe that your best hope is to get your ex to agree to a flat dollar amount and put that into the DRO.

That's something the fund can handle, since they won't have to make any calculations (which they apparently can't do anyway).

Tell the judge that you and your ex have worked through the numbers and both agree that this amount is consistent with what you both want... or something like that.

[Guest Chelsi]

Does the fund have a say in what figure I use for the starting figure in Masteff's example # 1 QDRO distribution language or should their only concern be whether or not the QDRO can be implemented?

I want to use a number based on figures that were in a letter from the fund to my ex, not in a photocopy of a statement dated 1 1/2 month before the marriage. The fund can't compare the figures on the statement to know whether they are accurate.

[david rigby]

Does the fund have a say in what figure I use for the starting figure in Masteff's example # 1 QDRO distribution language ....?

No.

The best/simplest advice is given by GMK:

... get your ex to agree to a flat dollar amount and put that into the DRO.

[masteff]

Does the fund have a say in what figure I use for the starting figure in Masteff's example # 1 QDRO distribution language or should their only concern be whether or not the QDRO can be implemented?

No, the plan has no say. You can use any number you want (keeping in mind that your ex has to agree to it). They will only care whether they can make a proper calculation using the numbers and dates in the QDRO.

Or as GMK, david rigby and others have said... you can come up with the final amount and use my 2nd example.

[GMK]

Chelsi, the fund doesn't care what starting dollar amount you use, unless the fund has to figure it out. And in your case, it can't figure it out.

The fund is not required to go to a lot of effort to calculate QDRO amounts, so they won't. It's really a matter between you and your ex, and the fund just wants simple instructions on what to do. If you can specify a flat dollar amount to the fund, they will like that very much.

Before the judge signs the DRO, she/he may want to be satisfied that the dollar amount is not out of line with the divorce agreement and may want to see the calculations (which can have approximate amounts). If you and your ex agree to the amount before the judge, my guess is that the judge is likely to sign the DRO.

Another step that might help move things along is to send a draft of the DRO to the fund before you go to the judge. Ask the fund if they would accept the draft DRO as qualified (if the judge signs it), or if the fund needs anything changed or added. The fund may want certain things spelled out (even if they don't seem to matter to you or your ex), just for completeness. That way, you know that if the judge signs it, the fund will pay it.

Hang in there. QDRO's aren't fun, but you can do this.

[Guest Chelsi]

Thank you for all the encouragement. I worked out the following distribution language in the QDRO with the fund and they appoved it:

"ORDERED, that the Plan Administrator shall establish a separate 457 account in the name of

the Alternate Payee as follows: SIX THOUSAND TWO HUNDRED FORTY EIGHT

DOLLARS ($6,248.00) shall be subtracted from the Participant’s account value as of September

30, 2005. Fifty percent (50%) of the resulting amount shall be credited with earnings and/or

losses, as determined by the Plan, from September 30, 2005 until such time as the account is

established for the Alternate Payee. The aforesaid amount shall be transferred to

said account in the name of the Alternate Payee from the Participant’s account under the Plan."

I sent it to the Judge with a letter explaining that the Fund did not have my ex's account balance as of the date of marriage in Feb 1991 and did not have any records for losses/gains for years 1991, 1992, 1993, and 1994, and I referenced how I derived at the $6248.00 figure. I explained that my ex had sent me a copy of a letter that the fund sent him itemizing his yearly contributions to the fund. I simply added the amounts before 1991 to get that amount. My ex had actually written on the letter the amount per month he contributed to the fund in 1991, so I took the figure he gave and used it to pro-rate his contribution for the part of 1991 up until the marriage. Okay, so far?

Alas, my ex is rather hostile, so the ideal scenerio of getting together and agreeing on figures just won't happen in my case. That is why I have to do it this way.

Previously, he did not object to the first QDRO that just split the amount as of September 30, 2005 50%. It was the judge who then changed the language that resulted in the fund rejecting the QDRO.

I sent copies of everything to my ex and his lawyer. So, if my ex disagrees, he has to have proof of what he is claiming, is that correct? Even if he doesn't challenge it, I just hope the judge signs the QDRO, as is.

[Guest Chelsi]

The QDRO (approved by the fund) was submitted to the court with notice to my ex and his lawyer.

The settlement date of Sept. 28th passed and they never sent me anything contesting it.

At this point could my ex still contest it or complain to the fund?

Could the fund change thier mind about their approval of the QDRO based on my ex's complaining to them?

My ex has no account statements before the marriage in Feb. 1991.

[GMK]

At this point could my ex still contest it or complain to the fund?

At this point, anything could happen, but, based on your last post, you are headed in the right direction.

Try to filter out the extraneous possibilities. They aren't worth your worrying about them.

The two steps that matter are that the judge signs the DRO and that the fund confirms that what the judge signed is a qualified DRO.

[Guest Chelsi]

This is an update on my QDRO situation. I recently got this message back from the court clerk:

"The court made corrections to the 2 qdros you submitted so that the terms of the stipulation were met in the qdros. You are now submitting 2 qdros because you say the court made changes and the plan won' t accept the changes to the qdros. The court is bound by what is in your agreement and the fact that there were no objections from your former husband does not mean that the judge has the authority to sign any order that is put before the Court. You and your former husband can either sign an amendment to the agreement to conform to the terms that the plan will accept, or you can file an order to show cause[motion] for the court to decide if the "revised" qdros should be signed. The letter you sent to the judge which contained your proposed calculations for the value of each fund may be used in affidavit form to support your motion. I cannot comment on the merits of the calculations you used to value the funds. I will hold the qdros until I hear from you on how you would like to proceed."

The clerk won't give the revised QDRO's to the judge. He says I have to make a motion to the court or amend the agreement. So is the clerk saying that it's his interpretation that the revised QDRO's differ from the agreement? Is that his call?

What makes this difficult is that my ex won't cooperate or agree to anything. He won't even pay his share of medical support for our son.

I could bring a court action and also sue based on the ex's default of the agreement - that he is not cooperationg with the preparation of the QDRO's- and request a money judgment for the value of my share of his fund and provide my calculations or request the judge to determine an amount based on the evidence submitted.

I would appreciate some advice from anyone who has experience with this! Thanks!