Authority for Multi-Employer Plans

[Thornton]

I've been drafting QDROs for several years for family law attorneys. I am working on my first Multi-Employer Plan (Carpenters' Union) QDRO. This is my first QDRO with the participant in payment status. The monthly benefit is $3,610.64 (disability) for the lifetime of the Participant with a 75% survivor benefit to the surviving spouse. The Marital Settlement Agreement provides that the monthly benefit is to divided equally. Since the annuity election can rarely be changed, how much does the Alternate Payee receive: 

1. $3,610.64/2 = $1,805.32?

2.  50% of the gross monthly benefit as if the participant had elected a Single Life Annuity? This would provide the AP any possible cost of living increases, etc., but could change the amount of the payment to something other than $1,805.32.

3. If 2 is chosen, what protections can be provided for the AP if the participant predeceases her?

4. Single employer plans are qualified under IRC 401. Is this also true for Multi-Employer plans?

The sample QDRO from the union doesn't really address this? Any comments are appreciated!

 

 

[Larry Starr]

I would prefer to see the settlement agreement before commenting, but since I won't see it.....

I vote for #1.  If it says half of the monthly benefit and he is in pay status, then the parties know what the monthly benefit is and she gets half of that.  QED.

Yes, a multi employer plan is still a qualified plan (which is Sec 401 of the code).

[david rigby]

Your description of (3) seems to imply that (2) includes a change of the underlying payment form.  Even if allowed by the plan (seems unlikely), such change must be affirmative by both the Participant and AP, rather than implied by the DRO. 

IMHO, the answer must be (1), and the J&S portion is unchanged.  BTW, if there are any possible COLAs, it will be prudent to explicitly describe how they are applied under the DRO.

[jpod]

I am inclined to agree that you have to go with (1).  However, isn't she entitled to the full survivor's benefit given that she was the spouse at the ASD?

[CuseFan]

Agree with all - it's #1, and to jpod's point that she is still entitled to full 75% survivor annuity if she survives him. Also, I think he should be entitled to her current portion if she predeceases him, but (hopefully) QDRO addresses that - a well drafted one will.

[Thornton]

Thanks for for your guidance!

[Effen]

Be careful of the disability provisions and make sure it really is a J&75 currently.

If the P is younger than NRD and is receiving a "disability" benefit, this might be an ancillary benefit and not part of the "retirement" benefit.  It is common that the disability benefit is paid until NRD, at which time the participant makes an election of their retirement option.   Participants rarely understand this, so make sure you are reviewing the plan document.

Make sure the QDRO addresses both benefits.

If he is beyond NRD, the only option is to have a portion of the benefit previously elected to be directed to the AP.  My opinion is that you can't change the form of payment once the payment has commenced.