QDRO under an ESOP

[Guest svatty]

An ESOP, which by its written distribution policy, provides that distributions to participants who terminate employment (for reasons other than disability, death or retirement) will begin in the sixth plan year following the plan year in which such employment terminates has received a DRO from the spouse of a participant. The participant is over 50 years of age and has a significant account balance in the ESOP.

The ESOP document provides that an alternate payee will be eligible to begin receiving distributions under the ESOP as would any other employee who terminated service on the date the DRO was qualified. (That is the plan specifically provides that the alternate payee distribution options/timing will be determined as if such alternate payee was an employee who terminated on the date the DRO was qualified.)

My question is can the plan delay distributions to the alternate payee until the sixth plan year following the plan year in which the QDRO was qualified?

How does this "jive" with 414(p)(4)(B) "earliest retirement age" language? Since the participant is over 50 ... does the Section 414(p)(4)(B)(ii)(II) language provide that because the plan uses the 409(o) "ESOP extension" for distributions mean the alternate payee can be forced to wait for such a distribution?

How does this "jive" with 414(p)(7)(B) which provides for payments to be paid after the 18 month period during which the Alternate Payee could have received a distribution under the Plan ... i.e. 6 plan years following the plan out into the future?

I guess I am just concerned over the status of 409(o) "extended ESOP timing issues and the 414(p) rules.

As a related side note ... how is the diversification election handled in a QDRO situation. If the participant is eligible for diversification under the ESOP then:

(1) may the administrator "freeze" this right if a DRO is in process?

(2) may the alternate payee (after an account has been established on his/her behalf) then also diversify his/her portion of the account based on the participants service?

Thanks.

[This message has been edited by svatty (edited 05-15-2000).]

[This message has been edited by svatty (edited 05-15-2000).]

[This message has been edited by svatty (edited 05-15-2000).]

[Guest svatty]

Hello?

Anyone .... Anyone .....