QDROs & ESOPs

[Guest Salvador A Mander]

Can a DRO that directs loan payments from an ESOP to a participant be a QDRO? SH-participant sold ER stock to ESOP, and order requires that the loan repayments be split. I don't know that this is subject to a QDRO, as the "benefits" are the underlying stock.

[A Shot in the Dark]

I see that you have made this post a couple of times.

I am confused by your question.

Let me restate what I think you are asking:

Via some form of stock purcahse agreement a selling shareholder agrees to sell his/her stock to an ESOP. As part of the sale, the seller completes some form of seller loan agreement and note.

Thus, the employer makes a contribution to the ESOP and the ESOP in turn makes a payment to the seller subject to the loan agreement and note.

If you question is: "Is the payment from the ESOP to the selling shareholder subject to a QDRO?", I believe the answer is no.

[Guest Sieve]

I agree with Shot. The payments paid to the selling shareholder by the ESOP are not plan benefits--they are payments made in a debtor/creditor relationship--and therefore are not the subject of a QDRO. It should be sufficient if the divorce decree orders that the payments be redirected, and the Plan ought to comply. I would also assign a 50% (or whatever) interest in the ESOP's note to the alternate payee.

[Guest Salvador A Mander]

I see that you have made this post a couple of times.

I am confused by your question.

Let me restate what I think you are asking:

Via some form of stock purcahse agreement a selling shareholder agrees to sell his/her stock to an ESOP. As part of the sale, the seller completes some form of seller loan agreement and note.

Thus, the employer makes a contribution to the ESOP and the ESOP in turn makes a payment to the seller subject to the loan agreement and note.

If you question is: "Is the payment from the ESOP to the selling shareholder subject to a QDRO?", I believe the answer is no.

Yes, I posted this question in the QDRO forum, but then thought it was more appropriate for the ESOP forum. Your summary is correct, and that is where I was also coming out - that the loan repayments are not subject to a QDRO. Thanks very much!