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Patricipant Hardship - Pending DRO

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We received a "Sample DRO" for approval prior to submitted to court for judges signature. It awards 50% to the Alternate Payee. Participant wants Hardship for the rest of the money. Our QDRO procedures allow the Plan Administrator to put a hold on the participants account.

1. Participant needs money for principal residence. Any way to allow to get his 1/2 prior to the final DRO which allows us to segregate the account?

2. In order to maximize the hardship available for the participant, can the DRO pay out of just EE, Deferrals or must the 50% be taken from all sources pro rata? Does the basis used to calculate the hardship available get prorated by 50%?



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Get some useful written QDRO procedures and then look at the answers provided in the procedures. This is a great opportunity to see some of the issues that should be addressed in the procedures and to reconsider policies that are questionable, such as restriction of accounts upon receipt of a draft order (although you may be stuck on this one). Since you are probably stuck with the restriction, and assuming that the wording in your QDRO procedures is a dull as the thinking behind the provision, you may be able to interpret the restriction in accordance with the law, which requires only protection of the amount would be paid to the alternate payee if the order were determined to be qualified (and only after receipt of a domestic relations order). DON"T TAKE MY WORD FOR IT. LOOK AT THE STATUTE OR GET PROFESSIONAL ADVICE. The ordering of charges to sources to fund the alternate payee's interest is also a matter that should be adressed in the QDRO procedures (or the plan document), but many plans are stuck because their service providers are inflexible bullies and will only allow adminstration one way -- typically pro rata. Or you can say that the inflexibility of the service providers is a product of the quest for efficiency that keeps the price of adminstration as low as possible for the benefit of plan participants generally. It depends on you personality. I am harsh and critical.

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