GAL as Alternate Payee???

[Wacko in Winnebago]

I've been embroiled in a parentage case (parents were never married) that repeatedly defies logic. The latest twist is that the minor child's guardian ad litem is now seeking a QDRO to collect their fees from one parent's 401(k) Plan. I have no doubts that the judge will grant/enter/issue the requested QDRO once it is drafted. 

Is there any case law that supports naming a GAL as an Alternate Payee in a QDRO? I cannot find anything in my research.  

[Lou S.]

If it's a court order authorizing payment of child support for the minor child but I believe in that case the minor child is the alternate payee even if the gauradian is the one that receiving the payments and using them for child support and the taxes are the responsiblity of the partcipant. But maybe a QDRO expert (which I am not) can shed more light.

[Peter Gulia]

WinW, as your question suggests, the key question is less about what a State’s court orders and more about whether an ERISA-governed plan’s administrator will treat the order as a domestic relations order and (if a DRO) as a qualified domestic relations order.  (I assume the State court does not have personal jurisdiction of the plan, the plan’s administrator, or the plan’s trustee.)

Which person is your client?  The child?  The child’s mother?  The child’s father?  Another parent?  The guardian ad litem?  The 401(k) plan’s administrator?  The plan’s trustee?

Also, is the guardian ad litem an attorney-at-law or not?  And were the fees incurred to pursue the child’s right to get child support from a parent other than the child’s mother?

[Wacko in Winnebago]

Mr. Gulia,

I am the non-custodial father, acting pro se.  You are correct that the state court does not have personal jurisdiction of the plan, the plan’s administrator, or the plan’s trustee. The guardian ad litem is an attorney and the fees were not incurred to pursue child support. Child support was ordered (payable to the custodial mother) prior to the GAL's appointment by the state court and there has never been an issue with payments. The GAL fees were incurred for an investigation concerning non-compliance with the visitation schedule and protective orders.  

[fmsinc]

In the case of In re: Blaemire that you can find at https://scholar.google.com/scholar_case?case=7414914616513795651&q=blaemire&hl=en&lr=lang_en&as_sdt=20000003&as_vis=1

the Bankruptcy Court for the District of Maryland held that payments made to an attorney for a child or for a Guardian Ad Litem ("GAL") appointed for a child are in the nature of "child support" and not dischargeable in Bankruptcy.   Cases from other jurisdictions are cited in the Court's opinion.  

[You might want to read the 13 other cases that discuss Blaemire to see if it's interpretation of the law is the same in your state or if you State law is silent on the subject.  See https://scholar.google.com/scholar?hl=en&lr=lang_en&as_sdt=20000003&as_vis=1&q="In+re%3A+Blaemire"&btnG= ]

If such payments are indeed "child support", then collection can be made via the use of a QDRO per IRC Section 414(p)(1)(b). Many Court child support collection departments rely upon the use of QDROs as their primary method of collecting child support arrears.  So you might want to check with your local Court and see: (i) if they will collect the amounts due to you and pay it over to you; or, (ii) provide you with the forms and procedures that they use for their QDRO collection efforts. 

Note that your QDRO can ask for a lump sum distribution of up to 100% of the Participant's vested balance.  It does not matter whether of not the Participant is eligible to take distributions himself.   

The GAL will be listed in the QDRO as the Alternate Payee and the GAS will provide the Plan Administrator with his Social Security number and date of birth.  That means the GAL will be taxed on the amount he receives. A percentage will likely be withheld. 

There is a problem in that under IRC 414(p)(8), an Alternate Payee is defined as the "spouse, former spouse, child or other dependent of a participant who is recognized by a domestic relations order as having a right to receive all, or a potion of, the benefits payable under a plan with respect to such participant."  Since the GAL lawyer does not meet any of those definitions, it would seem that a QDRO will not be available to collect his fees directly.  BUT.....

The work around is to name the child as the Alternate Payee, or the GAL "as trustee" for and on behalf of the child, and to specifically provide that the Participant will be solely responsible for the payment of all taxes and tax penalties that result from the distribution to the GAL from the Participant's account.  [Since under the IRC child support is not deductible by the payor or taxable to the payee and is paid on an "after tax" basis.]   But this raises the question of whether the check from the Plan Administrator will be sent to the mother who will have to then be ordered by the Court to transfer the payment to the GAL.  

Depending on the amount involved, the GAL might find it makes more sense to get a judgment for the fees due (he should already had such a judgment) and pursue collection by more traditional means - garnishment of the dad's income or attachment of his bank account or other assets.  This is not something that you can do without an attorney experienced in QDRO matters and I don't think you can recover those additional fees.  So a cost/benefit analysis is in order.  

One last matter.  The laws relating to QDROs come from the Federal statute ERISA.  There is no need for the Court in your state to have "personal jurisdiction" over the Plan or the Plan Administrator.  Upon receipt of a certified copy of a QDRO from any state Court, the Plan Administrator is required to comply.   

David S. Goldberg   

[fmsinc]

Follow up:  In the Joint Committee on Taxation, Explanation of Technical Corrections of the Tax Reform Act of 1984 and Other Recent Tax Legislation, 100th Cong., 1st Sess. (Comm. Print 1987) at 222, it provides that if the Alternate Payee is a minor or is legally incompetent, the QDRO dan require payment to someone with legal responsibility for the Alternate Payee (such as a guardian or a party acting in loco parentis in the case of a child, or a trustee or agent for the Alternate Payee.  

I don't know whether a GAL meets the definition above.  A suggested alternative was to have the payment made to the child support collection office on behalf of the child with instructions to pay it to the GAL.    

 

David S. Goldberg 

[Wacko in Winnebago]

Mr. Goldberg,

Thank you so much for your information and analysis. I've read the case you provided (and several of the 13 following cases that discuss it), and it aligns with my previous research which, as you said, GAL fees are usually determined to be "in the nature of support" and therefore non-dischargeable in bankruptcy. 

However, it appears to me that there is a difference between the "in the nature of support" standard under the Bankruptcy Code and the "child support" standard under ERISA that has never been addressed. I think I mentioned in one of my previous posts that I haven't been able to find any cases where a GAL has been granted a QDRO to collect their fees. The issue of collecting attorney fees through a QDRO appears to be dependent on the purpose of the underlining litigation, with a more stringent standard towards collections of support arrearages than the "in the nature of support" standard in bankruptcy which encompasses a broad spectrum of custody and health and welfare of the child issues. 

I agree with you that there are many xxxxxxx, BUT what about yyyyyyy, UNLESS zzzzzzz intersections of the various requirements and definitions, including potential issues with the workarounds you suggested. For example, can the GAL really be considered a "guardian" or "trustee" when they have no legal responsibility for the child? And if they were assigned such a "role" as a workaround, wouldn't that trigger conflict of interest concerns? And wouldn't any state law that might be used to achieve such a result be pre-empted by ERISA?

Questions for which I have been unable to find answers, which is why I came to the experts...