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Is QDRO and Stipulated DRO the same thing?


Guest Itsalmostfinished

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Guest Itsalmostfinished

Hello all.

I expect the answer to the question in the title of this post is, No. In the mail today I received a Stipulated DRO. I had been expecting a QDRO. The cover letter attached to the S-DRO does mention that when the S-DRO is returned with notarized signatures, then will the QDRO be filed with the court. After the judge has signed, the QDRO will then be served on the plan. I am miffed to say the least because it was last March that it was clearly articulated and agreed to by my attorney who has been paid to perform the QDRO. Now I find out that the QDRO hasn't even gone out to the court! In all my research I had seen no reference to a S-DRO so I am wondering what is going on. I'm thinking I am not going to sign this Stipulated DRO until after further information is received from professionals. (Of course the mailing was received after 4 PM on a Friday.) I'm so done with the length of this process yet I anticipate further delays. Oh goody!

Thank you for any insight given.

FYI: I've done the divorce pro per, it was signed off by the court last month. The MSA signed off by the judge made specific mention of the terms of the ICMA 457 pension awarded 100% to me, the petitioner and non-employee spouse. Joinders filed last June 2012 but I settled for just the one pension.

I spent several hours looking through this site today. I sure wish I had found this site before now.

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Guest Itsalmostfinished

Addendum:

Some peculiar language is included in the Stipulated DRO. I'm wondering if this is merely "boiler plate" wording. To wit, the MSA was specific that the respondent (not me) pays any and all taxes or fees associated to distribution or transference of 100% of pension to me. Now I see the Stip DRO specifies that, "It is the parties' interest that, to the extent possible, each party be responsible for the taxes due..." continuing, "...Alternate Payee shall be responsible for, and shall pay, any taxes which are due on account of any amount received by Alternate Payee from the Plan."

This is NOT what Petitioner (Alternate Payee) and Respondent (Member Spouse) agreed to and set forth in MSA. MSA was signed by both of us and judge signed off on it.

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I'm not a lawyer, so no idea if the word "stipulated" has any special meaning whatsoever.

Technically, it's a DRO until the plan administrator determines it to be qualified at which time it becomes a QDRO. You don't declare it qualified, someone else does after the judge signs it. Based on your post, the cover letter explains the sequence of events to come. See "Who determines whether an order is a QDRO?" here: http://www.dol.gov/ebsa/faqs/faq_qdro.html And it's rare that a DRO would have been filed prior to the completion of the divorce, which you said was just last month. This is very normal timing.

As to the taxes... Generally speaking, under IRS code sections 412(p)(12) and 402(e)(1)(A) (i.e., Federal Law), the alternate payee is responsible for filing and paying the taxes eventually due on assets transferred by a QDRO. You can speak w/ your attorney about what, if any, options you have to make your ex-spouse reimburse any tax you have to pay when you take a distribution from the plan.

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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  • 5 weeks later...

Unless a "stipulated DRO" has some specific meaning in your state I would take it to mean the terms are agreed-to by both parties. Some family courts will not sign off on a DRO until it is shown both parties have agreed to the language (or at least will not sign off on it without taking more steps than presenting it to the judge with a motion).

There's no confusion between the language you posted. Respondent pays administrative fees to process the segregation but the alternate payee will pay the taxes for taking the distribution. Taxes and fees are very different. I would be beyond surprised if your MSA states that the respondent is responsible for paying the taxes upon the distribution of your segregated portion of his or her benefit. However, I have not seen the language in your MSA so it may well say that. It would just be highly irregular.

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Guest Itsalmostfinished

Gents, thank you. Flatware, aka forksnknives makes the most sense. That is, the response is most congruent to what I understand of my sad case. The DRO was sent for my signature but so full of errors it required to be redrafted. So much for the in-house review process..

As for "Stipulated", apparently that is a term found in CA courts for this document. I swear to God the damn lawyers want it this way. Baffle and befuddle. I'm no dummy but substitute terms at odd places sure puts a twist on things. Lord help you if you don't know the secret handshake. Oh, that will be $350/hr and we still won't tell you what you want to know. We know, we told you one thing but that was just to tease you. Now pay up.

Senior partners in the firm are now looking into the skullduggery. The plan admin has contacted me directly to inquire what in blazes is going on. And still I sit with 6 figure sums hanging.

As the MSA has the superior court approval I wonder if it trumps the DRO. If so, who pays what admin fee and tax would necessarily fall to....who? It's a regular Peyton Place. You'd think the alleged 30 yrs of practice by the firm would yield better results.

The doc, as originally drafted alternated between "participant", "alternate payee", and "member" to identify the same person. In less than 2 paragraphs it was confusing to say who was who. For clue of the ident of this law firm, they have been in practice in CA for over 30 yrs, are recently in TX, and have recently gone through change of ownership.

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As to the taxes... Generally speaking, under IRS code sections 412(p)(12) ...

I believe that should be 414(p).

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.

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