Post-Death QDRO

[J Simmons]

The 2007 regulations (29 CFR sec 2530.206©, particularly Example (1) in paragraph (2) permit divorce courts to enter QDROs post-death:

Example (1). Orders issued after death. Participant and Spouse divorce, and the administrator of Participant's plan receives a domestic relations order, but the administrator finds the order deficient and determines that it is not a QDRO. Shortly thereafter, Participant dies while actively employed. A second domestic relations order correcting the defects in the first order is subsequently submitted to the plan. The second order does not fail to be treated as a QDRO solely because it is issued after the death of the Participant.

But in the case of a DB plan, does that increase the actuarial benefit payout risk to the plan, i.e., increase the benefit, in contravention of 29 U.S.C. sec. 1056(d)(3)(D)(ii) and 26 U.S.C. sec. 414(p)(3)(B) (QDRO must "not require the plan to provide increased benefits (determined on the basis of actuarial value)")?

By reason of the divorce, the participant was single. All the actual risk attached to the life of the participant, no spouse. When the single participant died, so too 'died' all the risk to the plan of benefit payout liability. So, does a post-death QDRO that attempts to give the ex-spouse part or all of the defined benefits that 'died' with the participant violate the clauses of the statutes that do not allow the QDRO to require the plan to provide increased benefits determined on the basis of actuarial value?

Had the participant commenced payout after the divorce and before he died (and before the QDRO), then his benefits would have been calculated as a single life annuity. Had the QDRO come in after that, it could only have been a shared payment one--a portion of the payments that would otherwise be made by the plan to the participant and ended on his death--not a separate interest QDRO for which payouts would be based on the life of the ex-wife or extend beyond the death of the participant. Carmona v Carmona, 9th Circuit.

In Example (1) in the regulations, at least the plan had notice by virtue of the rejected QDRO before the participant died, and the 2d QDRO is more along the lines of correcting post-death the technical errors in the pre-death one.

I have not been able to locate any other authorities that might bear on this. Your comments will be greatly appreciated.

[jpod]

I don't know what authority you need: If at the time of the DRO there is no benefit payable to anyone, the DRO cannot order a benefit to be paid. That is not to say a judge would agree with that immediately; he or she may have to be educated.

[My 2 cents]

I don't know what authority you need: If at the time of the DRO there is no benefit payable to anyone, the DRO cannot order a benefit to be paid. That is not to say a judge would agree with that immediately; he or she may have to be educated.

I do not agree that one should measure whether the benefit is payable as of a date later than the effective date of the DRO. When the divorce took place, the participant was alive, and the DRO can certainly provide that the ex-spouse is to be treated, for purposes of the plan, as though still the participant's spouse. Logically, it is not possible to reconcile the sequence of events with the on-point example in the regulations by saying that because the participant died before the DRO was corrected and deemed qualified by the plan administrator, nobody gets anything. The example in the regulations makes it crystal clear that such an interpretation is not acceptable.

[jpod]

I am not a QDRO expert like some other BenefitsLink participants. However, a DRO is not a QDRO if it requires the plan to provide increased benefits determined on the basis of actuarial value, and I think it is implicit that this determination is made at the time of the DRO. I could be wrong.

[J Simmons]

I don't know what authority you need: If at the time of the DRO there is no benefit payable to anyone, the DRO cannot order a benefit to be paid. That is not to say a judge would agree with that immediately; he or she may have to be educated.

I do not agree that one should measure whether the benefit is payable as of a date later than the effective date of the DRO. When the divorce took place, the participant was alive, and the DRO can certainly provide that the ex-spouse is to be treated, for purposes of the plan, as though still the participant's spouse. Logically, it is not possible to reconcile the sequence of events with the on-point example in the regulations by saying that because the participant died before the DRO was corrected and deemed qualified by the plan administrator, nobody gets anything. The example in the regulations makes it crystal clear that such an interpretation is not acceptable.

In the situation I am now dealing with for the employer's benefits department, the only DRO before the death was the decree of divorce which does fail the test to be a QDRO. And in distinction from the example in the regulations, the plan officials were not made aware of the divorce decree (as a DRO but defective as a QDRO) until after the participant died. In that respect the situation I am facing varies from the regulatory example. If it was crystal clear that the Johnny-come-lately QDRO means that the plan must honor it and pay benefits, then why did the example in the regulations give the extra facts about the first QDRO having been rejected by the plan administrator before the death and thus should be allowed to be fixed after the death--unless the fact that the plan administrator was made aware of the QDRO in progress before the death is significant? The example sets forth a very specific sequence that included the plan administrator having notice of the QDRO in progress BEFORE the participant died. Giving significance to that timing fact also helps harmonize the regulatory example with the statute--and statutes trump regulations.

[QDROphile]

The DOL shamefully failed to fulfill the mandate to deal with post-death QDROs in the same way the the DOL has consistently failed to get QDROs right since 1984. The regulations provide no new information or guidance. Don't fuss over what the regulations say or do not say in your situation. It is pointless. The DOL had nothing on its mind, so no one can fathom what to do in the interiesting sitations from the DOL's mindless imagination and inadequate efforts reflected in the regulations.

I approach the problem by looking at what was determined before the participant's death. If there is no domestic relations order provision that speaks to the division of the pension benefits, then it is unlikely that I would allow any interest to be awarded after death. However, I would be liberal in the evaluation, subject to allowing a cheat because the participant is not around to negotiate. For example, if the divorce decree (issued before death)said that the spouse gets half of everything as of some effective date (no specific mention of pension), I would allow a post death order that specified that the spouse would get half of the accrued pension benefit as of the efective date, including half of the related QPSA. The post-death order is not trying to cheat by capturing more of the QPSA that is implied by a reasonable interpretation of the decreee. I would not approve an order that tried to award more than half of the QPSA. If the plan administrator wanted to be aggressive, then the post death QPSA wold not be allowed because there is no pre-death evidence that the QPSA was intended to be awarded and the the law requires a death benefit to be specified in order to be valid. I recommend against stingy and technical interpretations, but I would hold the line at an agressive post-death award that appears to try to exploit the absence of the participant to resist. That means anything but a conventional division would be rejected.

[jpod]

I have a client that may be facing this situation. Participant in a DB plan and spouse divorced many years ago while participant was still active employee. Participant terminated with vested benefit payable only at NRA, never remarried, then dies prior to NRA. No benefit was payable under the Plan as a result of or following his death. Ex-spouse (they were divorced about 15 years ago) somehow found out about the employer's DB plan and is now poking around and making allegations that neither she nor participant knew anything about him having a DB benefit, the implication being it would have been divided in the divorce in some fashion had they known about it. With what is presumably the intent of trying to get a post-death QDRO, she has made a request for Plan documents and information about her ex-spouse's accrued benefit. Questions: Can any DRO at this point possible be a valid QDRO? (I maintain that now that the participant is deceased and no benefit is payable then it is impossible to have a QDRO now because it would require the Plan to pay something more than it is required to pay, which at this point in time is $0.) Putting that aside, even under a liberal interpretation of "beneficiary" as defined in ERISA, is she a beneficiary entitled to Plan documents/information because she MAY be able to get a QDRO awarding her benefits? (An alternate payee is a beneficiary, but is someone who COULD become an alternate payee a beneficiary?)

[jpod]

For those QDRO experts who are also familiar with what Judges might do in these situations, a follow up question: Is it conceivable that the state court having jurisdiction here would be willing to enter a DRO to award part (or all!) of this now defunct benefit to the ex-spouse of a LONGGG-deceased participant?

[david rigby]

I don't have any idea what a judge would do, but in the opinion of this non-lawyer, the ex-spouse is not a plan beneficiary, at least not now, unless the court produces a DRO. In my limited experience, this sounds like "re-opening" a property settlement, which (I understand) is rare.

[StaceyHelton]

I worked at a Field Benefit Administration office for PBGC for 4 years, and I can definitely say that PBGC did not have a time limit on how long after death a QDRO needed to be completed.

Question for jpod - if the participant and his spouse had been married at his death, would she have been entitled to a QPSA benefit? If so, I know that PBGC would definitely accept a post-death QDRO.

While active plans can do things that PBGC can't, the courts may look to what the regulating agency does for guidance.

[georgiene]

My ex spouse was a railroad retiree, we divorced 2008, with no mention of anything about Tier Two railroad benefits in the divorce decree.  He was 68 when he died in 2009 and had been receiving benefits for about 9 years or so.  We were married about twelve years and had one daughter.

I am fifty now, and reviewing my future retirement benefits. I worked briefly for the railroad, five years, and was reviewing social security, and still had five missing years of railroad work on my social security statement. I called social security and they said I also have a railroad retirement as I have five years of service after 1995. My retirement will also be through the Railroad retirement Board.

I called RRB (railroad retirement board) and they were reviewing Tier One and Tier II for me. She said I needed a QRDO? to be eligible to receive anything from HIS Tier Two (My understanding is you cannot name a beneficiary for Tier Two benefits, thus I had no idea this was possible.)

Is it possible to get my divorce modified or submit a QRDO at this point in time so that when I retire I would be eligible for half of his Tier Two benefit?

[QDROphile]

Benefits issue.  Railroad retirement benefits are unusual, so general knowledge about ERISA QDROs might not serve well. Ask the question of the RRB to start.

Divorce/State Law.  You will not get any of former spouse’s RR benefits without a domestic relations order that modifies or supplements your divorce property awards.  State law varies. Generally, revisiting divorce settlements/dispositions is proscribed or disfavored, especially after death.  Exceptions apply. You will need competent advice about applicable state law concerning the circumstances.

[david rigby]

Just in case, "competent advice" means you will need an attorney with experience in domestic relations law.  BTW, the RRB might use the term "court order" rather than DRO.