QDRO - Payment Prior to Earliest Retirement Age

[Pension RC]

A couple of years ago, a coworker asked me to prepare distribution paperwork for an alternate payee. I noted to my coworker that the QDRO states that the AP's benefit is not payable any earlier than the "attainment of the Participant's 'earliest retirement age' as that term is defined by internal Revenue Code 414(p)." Since the plan allows for distributions upon termination of employment, I understood this "earliest retirement age" to be the earlier of termination of employment and attainment of age 55 (plan's early retirement age). However, this person was 43 and still active. My coworker told me that it was okay, since the plan sponsor was fine with it and it was more advantageous to the AP. I prepared the distribution forms, but they were never completed by the AP. Recently, I was asked by the plan sponsor to prepare updated distribution forms for the AP. My coworker has since retired, and I think that she was mistaken, as there is no language in the plan itself allowing for distribution to an AP earlier than the date allowed in the QDRO. Does anyone have any ideas of what can be done (amendments, etc.) to allow the payment to this AP?

Thanks!

[QDROphile]

I have always considered the exception to the anti-assignement provisions of 401(a)(3) for assignment "pursuant to" a QDRO to mean that the terms of the order have to be followed, even if the terms of payment are more restrictive than the plan would allow. During the qualification process there are ways to avoid restrictive provisions that are the unintended product of incompetent drafting. Once the order is qualifed with terms that have an established meaning, variance from the terms is a difficult proposition. If a very careful reading (that does not mean a conserviative reading) of the terms of the order leaves you stuck as you describe, the only course is amendment of the order or occurrence of circumstances that fit other distribution terms. By the way, the "earliest retirment age" for a plan that allows distribution at termination is age 50.

[QDROphile]

Another thought. The interpretation of an order and the determinetion of qualification are fiduciary functions. You may be expected to provide a recommendation, but the ultimate decisons about administration of QDROs are made by a fiduciary.

[GMK]

From 414(p), in reference to "earliest"

(B) Earliest retirement age

For purposes of this paragraph, the term “earliest retirement age” means the earlier of—

(i) the date on which the participant is entitled to a distribution under the plan, or

(ii) the later of—

(I) the date the participant attains age 50, or

(II) the earliest date on which the participant could begin receiving benefits under the plan if the participant separated from service.

[david rigby]

In addition to possible amendment of the order, don't overlook the possible need for amendment of the plan.