QDRO where both are participants...

[austin3515]

Johnny divroces Susan. Both are participants in the Plan. Johnny owns 100% of the business.

1) Can Susan take a distribution to the extent of her QDRO proceeds? All of the money came from Johnny's 401k balances. Neither one is over age 59 1/2. The document does say that QDRO's can get paid out "as soon as possible" (i.e., you don't have to wait until the participant terminates), but now it is the participant themselves who are not eligible.

2) We've usually treated QDRO's as in-service distributions, to add them back for 5 years for top-heavy. But that doesn't seem to apply to well here.

Any help is appreciated...

[QDROphile]

Yes.

[austin3515]

Yes, they can take a distribution?

[mbozek]

Yes, they can take a distribution?

yes they can as in IRC 414(p)(7)(B) if the order is a QDRO.

[austin3515]

Sweet, THANKS!!

[John Feldt ERPA CPC QPA]

I think there was a case sometime ago involving some airline plan where sham divorces occurred just to get the money out of the plan when no in-service option was available. I think the court ruled that they took impermissible distributions. That's probably not your situation, just FYI FWIW.

[GMK]

My recollection is that the case was thrown out:

http://www.airliners.net/aviation-forums/g...ad.main/4582894

There may be an appeal.

[QDROphile]

Just the opposite. The court said the plan administrator had no business second guessing the bona fides of a state domestic relations proceeding. Years earlier, the Department of Labor reached a different conclusion about sham divorces in an advisory opinion.

[david rigby]

QDROphile is correct.

http://benefitslink.com/boards/index.php?showtopic=43688