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do we have to get the Qdro or can we agree on some lump some


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Hello - our divorce settlement has language on need for a Qdro. The marriage was only about three years and the sum of money is relatively small ( less then 25k) and it is simply in regard to a 401k nothing else. We paid $2k for the Qdro to get done but for a variety of reasons we find ourselves 5 years later with a difficult record garnering issues to complete the Qdro.  Can my ex and I, as mutual agreeable parties, ask for the Qdro to me removed if we can agree upon a lump sum. My ex is getting married and that is the reasons both figure we should do something to just finalize it. Qdro attorney says it is not the easy for all usual reasons why we should have just taken care of this originally (jobs have changed, plans are different, loans, etc) we live in PA. Hoping we can just go to Master and ask for a lump some? Thoughts?

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If you are asking if the 2 of you can agree on an amount for the plan to pay the other party, without the hassle of a QDRO, the answer is NO, the plan cannot pay anything to a non-participant without a valid QDRO.  Your Q implies there is no current QDRO (perhaps only a draft DRO); you might be required to complete it, based on the terms of settlement agreement.   If no QDRO in place, and none required (read document(s) carefully), the 2 of you can agree to a "settlement" outside of the Plan, but take note: (1) no rollover available, (2) the payment will (probably) not be taxable to the recipient.

What is meant by "go to Master"?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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Thank you for your reply. I was wondering if we could go back to the court/Master/Judge and ask that the need for the Qdro be removed and that a mutually agreed upon lump sum might suffice. Money here is small but the info gathering process appears as if it is going to be a pain.

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The answer is that you probably can do that, but you need to be speaking with your lawyer.  You are not going to get the individualized advice you need on something like that from a message board.

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1 hour ago, Dpf said:

Thank you for your reply. I was wondering if we could go back to the court/Master/Judge and ask that the need for the Qdro be removed and that a mutually agreed upon lump sum might suffice. Money here is small but the info gathering process appears as if it is going to be a pain.

No, you can't do that. David Rigby gave you the correct answer.

However, if you are both willing, the participant can take a 100% distribution and roll it over to an IRA. THEN, the IRA can be split between you on the basis of the divorce agreement; part in his name and part in her name.  From your posting, it appears that your jobs have changed, so if the participant is eligible for a total distribution, this might be your easiest path. This, of course, does require trust in the participant to actually make the IRA division.

I have to point out to our readers that it makes no sense that you had such difficulty, or, frankly, that you paid so much for a QDRO that didn't happen.  I'm going to assume your fee covered other services as well and that we really don't know the full story.

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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Larry - thank you for your reply. To explain a bit further the delay in getting this done as really just for the most part stupidity and negligence on our part in following up on the matter and providing the QDRO firm the info they were requesting in a timely manner.  So our delaying made this the challenge. Not the Qdro form but now it is indeed a mess.

i like you suggestion of the IRA route. Would the Master/Judge have to okay that first? I imagined that would be the process in order to protect everyone.

 

 

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Larry Starr has exceedingly high standards (or lack of imagination) for use of precise language in interpretation of posts, especially when jpod is posting.  If removing the QDRO means issuing an order that effectively cancels the QDRO so you can substitute some other arrangement, yes, the Master probably can do that, subject to state law.  And that is what needs to be done to clear the decks for any alternative, such as the IRA  route.

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1 hour ago, Dpf said:

Larry - thank you for your reply. To explain a bit further the delay in getting this done as really just for the most part stupidity and negligence on our part in following up on the matter and providing the QDRO firm the info they were requesting in a timely manner.  So our delaying made this the challenge. Not the Qdro form but now it is indeed a mess.

i like you suggestion of the IRA route. Would the Master/Judge have to okay that first? I imagined that would be the process in order to protect everyone.

 

 

I think it is a good idea to get the Master to agree and write that new provision. That protects everyone.  However, I am not your attorney and therefore can't really advise you legally. I assume you are not represented by individual attorneys and the master is serving in that role.  If that is the case. then talking to the master is a wonderful idea; ask him/her how to proceed to make this change.

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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9 minutes ago, QDROphile said:

Larry Starr has exceedingly high standards (or lack of imagination) for use of precise language in interpretation of posts, especially when jpod is posting.  If removing the QDRO means issuing an order that effectively cancels the QDRO so you can substitute some other arrangement, yes, the Master probably can do that, subject to state law.  And that is what needs to be done to clear the decks for any alternative, such as the IRA  route.

Sorry QDROPHILE. but my answer is still correct.  Not sure what your problem is with precision, but this is a participant asking (I usually refrain from talking to participants) but I felt sorry for them and especially what they paid for the QDRO (if that is all that it covered).

The questioner said: ". I was wondering if we could go back to the court/Master/Judge and ask that the need for the Qdro be removed and that a mutually agreed upon lump sum might suffice.".

That would NOT be adequate since this is still envisioning that the PLAN would make the distribution of a lump sum to each of them.  I understood what Dpf wanted; not a surprising request, but the PLAN can't ever do that without a QDRO. That is why I suggested the IRA route, which no one else had suggested.  That is the use of imagination (call it creativity) to solve problems, which I am well known for!

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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7 minutes ago, Larry Starr said:

Sorry QDROPHILE. but my answer is still correct.  Not sure what your problem is with precision, but this is a participant asking (I usually refrain from talking to participants) but I felt sorry for them and especially what they paid for the QDRO (if that is all that it covered).

The questioner said: ". I was wondering if we could go back to the court/Master/Judge and ask that the need for the Qdro be removed and that a mutually agreed upon lump sum might suffice.".

That would NOT be adequate since this is still envisioning that the PLAN would make the distribution of a lump sum to each of them.  I understood what Dpf wanted; not a surprising request, but the PLAN can't ever do that without a QDRO. That is why I suggested the IRA route, which no one else had suggested.  That is the use of imagination (call it creativity) to solve problems, which I am well known for!

I'm not convinced OP is asking for a lumpsum from the plan.  Those not in our industry often throw around terms that have a very precise meaning to us but mean something different to them.  OP could be asking if they could get an order that parties have agreed on a payment that does not involve the plan, overriding the first DRO.  In that case, the @QDROphile is correct.  If the OP is still talking about a payment from the plan, then you are correct, they obviously need a QDRO to pay the AP from the plan.

 

 

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17 minutes ago, RatherBeGolfing said:

I'm not convinced OP is asking for a lumpsum from the plan.  Those not in our industry often throw around terms that have a very precise meaning to us but mean something different to them.  OP could be asking if they could get an order that parties have agreed on a payment that does not involve the plan, overriding the first DRO.  In that case, the @QDROphile is correct.  If the OP is still talking about a payment from the plan, then you are correct, they obviously need a QDRO to pay the AP from the plan.

Sure, they might mean something else, but I am having trouble expecting that a participant who knows what a lump sum payment from the plan is would be suggesting getting an order on a payment that does not involve the plan! Seems to me the plan has to be involved since that is where the money is.  But it could be fleshed out more to make it absolutely clear.

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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