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Problems with QDRO identified after plan termination and benefits in pay status - any ideas?

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I'm hoping QDRO experts here might have some ideas on how to address this situation. 

FACTS: QDRO was accepted by the DB plan in 1998. In addition to dividing the interest under the plan between husband and ex-wife the QDRO required the husband to select a form of benefit providing a survivor benefit equal to at least 25% of husband's benefit under the plan and name ex-wife as the sole beneficiary of the survivor benefits. QDRO also stated ex-wife was to be treated as the "spouse" for all purposes under the plan. Plan accepted the QDRO as written. Husband retired in mid-2000s, selected a joint and survivor annuity and named ex-wife as beneficiary.

In 2019, pension plan is terminated and benefits transferred to an annuity provider. Participants were given the option of taking a lump sum upon plan termination. Husband was not allowed to take a lump sum due to the QDRO requiring he select a form of benefit with a survivor benefit. He was upset and wanted to "take his ex-wife off the pension". Plan sponsor tells them they can't do anything due to the court order (aka QDRO) and husband would have to go back to court to change it.  So...in December 2020 husband gets a court order modifying the QDRO in which both husband and ex-wife agree to remove ex-wife from the pension entirely (what?), designate a new beneficiary for any survivor benefits, and agree the remaining balance of the pension should be released in full to the husband.  Plan sponsor explains the plan is terminated and these changes cannot be made, even if ordered by a court (except beneficiary maybe). Husband and new wife are extremely upset.


1.  Was the law was different in 1998? Could a QDRO put restrictions on a participant's future benefits earned after the date of the QDRO (i.e. requiring form of payment with survivor benefits following divorce)? If not, I don't believe the QDRO should have been qualified and accepted by the plan as it was written.  

2. What liability does the plan sponsor have for accepting the DRO originally? What about for not allowing husband to select a lump sum when the plan was being terminated?  

3.  What do we do now that the plan has been terminated and benefits are in pay status with an annuity provider? Any ideas on what the plan sponsor can and/or should do in this situation?

I appreciate any thoughts you may have. 

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I assume the plan’s administrator denied QDRO treatment for the December 2020 order.

The plan’s administrator might ask its lawyer to read, carefully, the contract that transferred pension liabilities to discern how much of the problem from the 1998 domestic-relations order now is the annuity insurer’s headache or risk.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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Since the benefit was in pay status at the time the plan terminated and no changes can be made to the form of payment or the covered participants.  However, the plan was apparently offering a lump sums to retirees, which creates a new Annuity Starting Date and a new opportunity to change to a different optional form.  Since this participant had a QDRO in place, it sounds like the Plan Administrator (and hopefully the plan document) excluded those with QDROs from the lump sum offer.  Nothing wrong with any of that in my opinion.

Husband gets a new QDRO that changes things, PA rejects it because you cant change things once they are in payment status.  Nothing wrong with that.

In short, I have no issues with what the PA did.  If you want to confirm, as to see a copy of the amendment terminating the plan and see if those with QDROs were excluded from the lump sum option.  

1) The QDRO can require the Participant to select a specific option.  

2) PA did nothing wrong based on what you described

3) Husband could try to argue with the insurance company (as Peter said), but I wouldn't expect them to change anything either. 

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

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