QDRO reversal?

[K2retire]

Well here's a new one (at least for me). Participant and spouse file for divorce, obtain a QDRO and submit it for processing. They subsequently reconcile and request that the QDRO not be processed -- but the transfer has already happened. Is any correction required/allowed?

[david rigby]

Just my opinion, if the plan followed it's rules and completed the transfer to AP, then there is nothing else to do.

It seems unlikely the participant and AP can simply "request" a change to the QDRO.

[K2retire]

Supposedly they paid their attorneys to have the order reversed.

[david rigby]

A QDRO is an order of the court, with specific requirements under ERISA. Probably, the court can change it's own order, but there may be a deadline by which such change is irrelevant. Assuming the Plan was not notified of a revised QDRO before completion of the transfer, it's possible that deadline has passed.

[MoJo]

Courts can change their orders, but can't order a plan to do anything against it's terms, ERISA or the Code, and I would question whether they can "undo" a transaction that has occurred. That said, if the court still has jurisdiction over the matter, the court can now issue a "new" DRO that if it complies with the requirements to be a "Q"DRO assigns the AP's interest in their new plan benefits to the original participant.

[jpod]

The Judge entered a QDRO before the parties were divorced? Or, did they divorce, get a QDRO, then reconcile?

[MoJo]

jpod: Just curious as to why you asked the questions? A DRO doesn't need a "divorce" to be effective - it just has to be a valid order of a state domestic relations court (which can issue a DRO in a "legal separation" or for child support payments, or for a variety of reasons that don't necessarily end in divorce.... I've seen DR courts in Ohio do all sorts of things with retirement plan benefits in "legal separation" cases where one party is "divesting assets" in anticipation of a nursing home stay and triggering Medicaid payments.... No divorce.

[K2retire]

The Judge entered a QDRO before the parties were divorced? Or, did they divorce, get a QDRO, then reconcile?

I don't know.

Based on the ages, I'm pretty sure it wasn't related to child support. But it could be some form of spousal support related to a legal separation.

[jpod]

I know what ERISA and the IRC say, but I would find it a bit surprising if a QDRO dividing benefits was actually entered before the divorce. And, the fact that the spouses reconciled and now wish to undo the QDRO suggests that this was not the type of special case to which you refer.

[MoJo]

jpod: The one thing I am certain about when it comes to domestic relations law is that the parties defy logic or rationality in what they do, and how the "divorce" progresses....

[GMK]

Supposedly they paid their attorneys to have the order reversed.

Oops. Maybe they can get a refund from their attorneys, because they aren't getting an "undo" from the Plan ... except in the unlikely event that the plan allows Participants who have received a distribution to change their minds and put the distribution back into their account in the Plan. The DRO can't make the plan do anything it isn't already allowed to do.

[K2retire]

Although the funds were moved to an account for the alternate payee, there has been no distribution.

[Griswold]

I would definitely wait for a new order and make sure it's qualified.

[QDROphile]

If the plan still has the funds, I would allow a subsequent order that meets the requirements for a QDRO and says it is modifying the original order, to modify the original order to the extent feasible, including reversal of the assignment and the transfer to the account for the alternate payee. This is a rare circumstance in which Humpty-Dumpty can be reassembled and I would allow the "correction" of the original order.

[StaceyHelton]

There was a similar situation at my last job, except the participant was already in pay. The participant talked to a coworker about getting a new QDRO to terminate the prior QDRO (shared payment order, would have been simple), but she pointed out to him that if things didn't work out with the reconciliation, they would have to do a new order all over again, and it might just be easier to leave it alone. They were both getting their checks, they could deposit them into the same account if they wanted, etc. Turned out to be a good move - the reconciliation didn't work out, and the participant later thanked my coworker.