Jump to content

Unresponsive Alternate Payee


Recommended Posts

QDRO states that AP may commence her benefits on or after the participant's earliest retirement date but not later than the participant's normal retirement date. Participant is still active past NRD. We have prepared the benefit package for the alternate payee but she refused to return it. Plan document is silent regarding this issue. What are our options?

1. Start paying her on a life annuity basis (but she may refuse to cash the checks).

2. Wait until participant retires and start paying her with missing payments to participant's NRD (with interest or without interest?).

3. Wait until participant retires and start paying her actuarially increased benefits from participant's NRD to her commencement date.

4. Suggest to plan sponsor to contact participant and AP and request a new QDRO.

5. Other?

Link to comment
Share on other sites

I doubt that the plan document is silent and I suspect that the plan document provides for distribution in normal form (usually a single life annuity) when payments are required to start unless another form is selected. You can't expect the plan to address this specificall with respect to QDROs. The ODRO requires payments to start, so notify the AP what will happen if the AP does not respond in a reasonable time, taking into account any mandated notice periods. If the AP is unresponsive, then start payments. This assumes the AP has choices and that you have the relevant information to determine the payments. You might compress the process if the AP has no choices. #4 is negative for several reasons. Refusal to cash checks is a different problem that does not inform the timing of distribution.

Link to comment
Share on other sites

Inform her via certified mail return receipt that if she doesn't choose a payment option and return the completed forms to you within 30 days, you will immediately pay all the funds to the participant (her ex.)

Obviously I'm only kidding, but wouldn't it be fun to see how fast you get a response!

Sorry, I have no bright ideas to help.

Link to comment
Share on other sites

This is not a QDRO issue. The QDRO ordered the division which identified the amount to be divided and the method of division. The plan pays the AP according the plan rules. The plan should be the AP just as they would treat a participant who has reached NRD and has retired. The answer to your question can be found in the answer to the question "What must the plan do for a participant who has retired on the their normal retirement date without electing the form or retirement as required by the plan?"

The plan should use the default election and pay the AP, which probably is a single life annuity (actuarially adjusted if it is separate interest). If the checks are not cashed that is not a plan problem. The plan needs to be able to demonstrate that it has complied with the order AND acted in accordance with the plan procedures

Link to comment
Share on other sites

If the checks are not cashed that is not a plan problem.

Don't forget to remind the AP that she will be taxed on these distributions, whether or not she wants to receive them.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...