Suspension for how long???

[Below Ground]

Received QDRO and processed benefit package for alternate payee (AP) to make elections. While waiting for reply, found out that since package was issued the AP went to prison. Our normal practice is to suspend distribution until AP returns elections, which is normally not a problem. Logic is that if person returns elections there should not be any further issues about QDRO, such as contesting amount. Anyway, is there any required period for suspension, since the participant has terminated and wants payment of benefits? I note that AP's benefit is segregated into separate account for the AP.

[ETA Consulting LLC]

I may have the facts confused, but here's what I gather from your OP:

1) Plan Received DRO for amount (X) to be separated from participants account.

2) Plan Administrator Qualified DRO; now a QDRO for X amount.

3) Those funds, "X", have been separated from the participants account and are not longer reflected in the participant's account balance.

Given 1, 2 and 3, your question is how long does the participant have to wait for receiving a distribution in light of something that is going on with the Alternate Payee.

If my facts are correct, as stated, then the participant should be free to take a distribution under normal terms of the plan as it would appear the QDRO process (as it pertains to the participant) has been completed.

Good Luck!

[My 2 cents]

My read was that they are looking to suspend payments to the AP pending the return of forms signed by the AP. What could it have to do with the participant? The participant's entitlement, having been already reduced by the QDRO, should be entirely unencumbered, shouldn't it?

[Below Ground]

My concern is that the AP will contest the value which was segregated; in other words, decide that the AP should be getting more than was computed. Since these computations are rather straight forward, when this becomes an issue it is always related to the amount of interest credited. Personally, I have had a situation when a new court order was issued, after an original QDRO was processed. (The validity of that action was dubious at best.)

In great part my concern is related to the 180 day period during which the determination period where rights of the AP must be protected, and exactly what is the meaning of "determination period". We know that the DOL views this period to start on the first date the QDRO requires payment to the AP.

Since an AP must be afforded the same rights as the participant with respect to elections, does this mean that the protection period ends 180 days after the AP gets elections?

[Below Ground]

Correction. 18 months, not 180 days. Sorry bout that.

[QDROphile]

Although the Department of Labor disagrees in concept with this message to some extent, the notice of qualification which explains in detail the award (doesn't it?) establishes the AP's benefit and frames the potential contest. At that point the AP has the ability to file a claim under the plan's claims procedures concerning qualification and the interpretation of the order, as expressed in the notice, which includes the awarded amount and related earnings credits. Look to the plan's claims procedures for indirect guidance on how long the AP has to complain. Most plans use 60 days. The notice of qualification should explain (didn't it?) that the participant and AP have 60 days to complain about everything, using the plan's claims procedures. If there is no communication after 60 days, the AP has accepted and the participant is liberated. This should all be part of the written QDRO procedures of the plan (isn't it?). So get some competent QDRO procedures. The DOL disagrees to the extent that qualification is a matter that is subject to the plan's claims procedures -- or at least the DOL took that position on a panel ten years ago and the DOL does not learn or teach very well so who knows what the DOL thinks now.

[My 2 cents]

Under DOL or IRS rules, are any special procedures required when the participant or AP is incarcerated? Or is it OK to just proceed normally ignoring that fact?

[QDROphile]

I do not think there are special rules. For example, the spouse consent rules are no different because of incarceration of one or the other. A prisoner is not out of touch or incapacitated. In an exercise of fiduciary caution, the plan administrator might make greater effort to assure that the notice of qualification was actually received by the AP, which might mean resending the notice to the prison by return receipt mail and restarting the 60 days.under the renewed notice.

Was the order so difficult to interpret that the plan administrator thinks there is a substantial chance of controversy? If so, the order should not have been qualified. Or is the plan administrator (a) uninformed, or (b) cowardly?