Traditional DB Plan Doing Lump Sum - Simplified Alternate Payee ID Process

[rocknrolls2]

My client's traditional defined benefit plan is doing a lump sum window and hopes to open it up to alternate payees. The recordkeeper has suggested an approach that would simplify the eligibility of potential alternate payees to elect a lump sum. If there is a divorce decree and the decree mentions division of the pension, then further documentation is requested from the participant and/or his/her soon-to-be former spouse. If no division is mentioned in the decree, then no further documentation is mentioned and the only change that will occur is a change in marital status for the participant from married to single. Does anyone have any reason to object to the taking of this type of approach?

[Andy the Actuary]

This IMHO is not about documentation but about following a court order. I'm not an attorney but unsure of the legality of parties modifying a court order without due process. The QDRO should stipulate what is and is not available and since the lump sum option was not available at the time the QDRO was issued, it's likely it would need modification. I would rely upont an attorney and not a recordkeeper. Is this recordkeeper going to represent your client in court if this blows up?

[Effen]

APs have always been excluded from the lump sum windows I have worked on. As ATA says, unless the QDRO states the AP can receive a lump sum, I don't see how the plan can pay one without amending the QDRO.

[david rigby]

Agree, but watch out for existing QDRO's that have generic language requiring any additional benefit/feature to be offered to the AP. It may not be common, but it does exist.