Existing loan balance

[Guest greyarea]

I have a QDRO that states that the alternate payee is to receive 28% of the participants benefit in the plan (dc plan-daily valued). The QDRO does not specify treatment of an existing loan balance. Of course, there is one. I am of the thinking that the loan balance is an "asset" or alternate investment in the participant's account - and therefore the loan balance is included when totaling up the benefit prior to calculating the 28%. Is this correct, or have I lost my way somewhere?

[QDROphile]

Your thinking, in the abstract, is correct. Next you apply the thinking to determine what the alternate payee will get. Since this is a common situation, the plan's written QDRO procedures should provide the details, including that the division of benefits will take into account the loan balance unless the order otherwise provides. The QDRO procedures should also say that the alternate payee's award will be satisfied out of assets other than the loan. If you get any complaints that inclusion of the loan was not intended, then the shame is on the complainer for not reading the QDRO procedures and you will have no qualms about any need for the draft to be rewritten or the order to be amended, whichever applies. The response from the plan should state that the calculaton of the alternate payee's benefit includes the loan, but the alternate payee has no interest in the loan.