Using Divorce Decree without Separate QDRO

[AJC]

A plan participant has provided a copy of his divorce decree to the plan administrator. The divorce decree stated that 100% of the participant's account balance under the plan is to be transferred to his ex-spouse. The plan administrator determined that the divorce decree is a qdro (approved), and as such, has transferred the employee-participant's account balance to his ex-spouse.

My question: Was a separate qdro document required? Or was the plan administrator correct in processing the qdro (balance transfer) based only on the divorce decree?

[RatherBeGolfing]

2 hours ago, AJC said:

My question: Was a separate qdro document required? Or was the plan administrator correct in processing the qdro (balance transfer) based only on the divorce decree?

We don't have enough information to answer this question.  A divorce decree can meet the statutory requirements for a QDRO, so a separate QDRO is not required per se.  A separate QDRO is much more common though.

[QDROphile]

To get down to fundamentals, look at the definition of domestic relations order (a divorce decree is included) and then the requirements for what is necessary for qualification — what must be or not be included in the terms of the order.

[AJC]

Gotcha. Thanks for the responses. It is possible as long as certain requirements for determination are present.

[card]

There are also several court cases holding that a divorce decree can be a QDRO. But there is a sharp split in the Circuits on how a plan administrator should determine whether the DRO "clearly specifies" the information required for a QDRO. If you want to dig down further on this, look at the 2017 6th Circuit decision in Sun Life v Jackson and the Scotus filings (cert denied).

[MoJo]

If it complies, it complies.  We routinely get divorce decrees in lieu of a DRO, but in most cases, it doesn't qualify and we recommend a separate DRO.  It can be fun reading them though!  Our favorites involve who gets a half bottle of Johnny Walker Blue Label scotch (wife, but there was a notation in the margin that it was moot because the husband drank it), and another where the husband gets the farm equipment, but the wife gets a "pitch fork."

[Belgarath]

Too funny! At least it didn't provide that she got the half bottle of Scotch after it was filtered through his kidneys...

[QDROphile]

Sun Life v. Jackson suffers from the idea that the anti-assignment provisions applicable to "pension" plans applies straight across to welfare benefits.  But the point is well taken.  When the drafting is not focused on the goal (qualification requirements), the plan administrator has a more difficult job of interpretation.  This phenomenon is also found in orders drafted by lawyers who do not understand retirement plans or the law and try to cover the gap by throwing more words into the order in hopes of scoring a hit.  On the other hand, that problem is in part the fault of plan administrators who do not know what they are doing and only know an inflexible word formula to apply to determination of qualification.  #ill-advisedmodelQDROforms

[fmsinc]

IRC 414(p)(2) sets forth the information that needs to be present to have a Domestic Relations Order (it's not "qualified" until the Plan Administrator says it is.)  

(2)Order must clearly specify certain facts:

A domestic relations order meets the requirements of this paragraph only if such order clearly specifies—

(A) the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order,

(B) the amount or percentage of the participant’s benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined,

(C) the number of payments or period to which such order applies, and

(D) each plan to which such order applies.

 

That's it.  If you can find all of that information in the Divorce Decree or in the the Settlement Agreement incorporated into the Divorce Decree, you have a DRO and the Plan Administrator can "qualify" it and act on it. 

[Albert F]

Let me clarify three points.   

·       Benefit entitlements are determined under ERISA not under the Internal Revenue Code. In particular, ERISA § 206(d)(3) defines a Qualified Domestic Relations Order (“QDRO”) and the benefit entitlements they determine. That definition is repeated in IRC § 414(p)(1). A QDRO must satisfy both substantive and notice requirements under that definition.  

·       ERISA requires plans subject to ERISA § 206(d)(3) to maintain reasonable procedures with respect to notices and determinations pertaining to orders that may be QDROs. Those procedures must include provisions for the segregation of benefit payments that are at issue while the determination of whether a DRO is a QDRO.

·       An order is a QDRO whether the plan determines that the order is a QDRO.  In fact, courts may overrule plan QDRO determinations.

[QDROphile]

Perhaps you could edit the following; I cannot make out your point:

"An order is a QDRO whether the plan determines that the order is a QDRO. In fact, courts may overrule plan QDRO determinations."

 

[Edie]

This is my first time on this site and I am not sure if I am actually in the right place to start a new forum with regards to QDRO in divorce cases and the disbursement of ones pension. My question is as followed: My parents were married for over 30+ yrs and are now divorced.  My father left my mother as his primary and only beneficiary for his pension during the early 1970's when he completed all documents per his retirement. He recently passed and my mother was awarded the one time death benefit and is currently collecting my father's Social Security benefit's but she was not awarded his pension nor his annuities.  NYCER  requested a QDRO of which there is none.  In fact, I obtained there divorce decree and realized that upon there divorce my father did not complete an income work sheet which he is obligated to list his assets such as his Social Security Income and his pension as well as his property as a homeowner so that the judge would see what each individual is entitled to after they divorce.   According to the laws of Florida of which my father had relocated to from NYC during his retirement, was supposed to list all of his assets/financial listing.  In any event, there divorce was an uncontested divorce 2008 and the judge hand written, "Each parties shall lawfully retain all property real and personal that is currently in their possession" there is nothing stipulating anything as to his pension and if my mother should not receive it or not or am I in denial in what I am reading?  However, prior to my fathers passing he stated, " He never changed his beneficiary and my mother would receive everything because he left her as the primary and only benificuary?  Please advise, Thank you.

[QDROphile]

It is difficult to respond with any confidence without full information, and you will not be able to provide full information here.  You will not be able to get a competent, correct, and complete answer here.  You (your mother) needs professional assistance to evaluate and pursue her interests. However, it may help to get some learning and guidance here if you provide some additional information here, and it would be better if you started a new topic rather than confuse or divert a current topic.  There is a "Start New Topic" button at the top.

Additional information to provide:

What is NYCER?  Is the pension a defined benefit pension plan?  Is the employer a government or government instrumentality or a private company?  Did your father start his pension benefits before or after the divorce, or before or after his death? In what form was the pension paid -- if being paid (e.g. single life annuity, joint and survivor annuity)?  What forms of payment are allowed by the plan?  Where did the "death benefit come from?  Did your father remarry?  If so, was it before or after his pension payments started (if they started)?

Possible outcome, based on ignorance of relevant facts and assumptions to fill the gap:  Your father did not remarry and he started his pension after the divorce.  The pension plan provides that participants unmarried at the time of start of benefits can receive only a single life annuity.  This is a common pension plan design.  That means that your father would receive pension payments for his lifetime that would cease at his death and no further payments would be made to anyone regardless of beneficiary designation.  The pension plan operated properly and your mother gets nothing.  That does not mean she has no claim against your father's estate because of the pension failure, but that is where you leave the realm of this website and need personal professional advice. 

[Edie]

This is my first time on this site and I am not sure if I am actually in the right place to start a new forum with regards to QDRO in divorce cases and the disbursement of ones pension. My question is as followed: My parents were married for over 30+ yrs and are now divorced.  My father left my mother as his primary and only benificuary for his pension during the early 1970's when he completed all documents per his retirement. He recently passed and my mother was awarded the one time death benefit and is currently collecting my father's Social Security benefit's but she was not awarded his pension nor his annuities.  NYCER  requested a QDRO of which there is none.  In fact, I obtained there divorce decree and realized that upon there divorce my father did not complete an income work sheet which he is obligated to list his assets such as his Social Security Income and his pension as well as his property as a homeowner so that the judge would see what each individual is entitled to after they divorce.   According to the laws of Florida of which my father had relocated to from NYC during his retirement, was supposed to list all of his assets/financial listing.  In any event, there divorce was an uncontested divorce 2008 and the judge hand written, "Each parties shall lawfully retain all property real and personal that is currently in their possession" there is nothing stipulating anything as to his pension and if my mother should not receive it or not or am I in denial in what I am reading?  However, prior to my fathers passing he stated, " He never changed his benificuary and my mother would receive everything because he left her as the primary and only benificuary?  Please advise, Thank you.

[Edie]

NYCER stands for " New York City Employees Retirement" my father was employed by the city, he was a New York City Hospital Police Officer and paid his union dues to Local Teamster 237.  My parents married in 1971 divorced in 2008 neither remarried. My father began collecting his retirement in 2002-03 until he recently passed in August of 2018. The one time death benefits that my mother received came from NYCER my fathers employers retirement funds.  NYCER has my mother listed as primary and only benificary as surviving spouse but was informed she was not entitled to his pension nor was she entitled to the remaining annuity funds in the amount of $7,000.00 of which is still sitting in his account. I hope I answered your questions and hope you can assist or guide us in this delicate matter. Thank you.