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Termination of benefits under D/B plan on remarriage of the Alternate Payee.


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Two questions:  

I have always known that a QDRO can provide that the payment of benefits from an ERISA qualified defined benefit plan can provide for termination of benefits not only at the death of the Participant or at the death of the Alternate Payee, but also on the Alternate Payee's remarriage.  See page 105, paragraph “2" at the top of the page at -
https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/qdros.pdf.  

....where, in discussing QDRO language, it says that, "Payment to the Alternate Payee shall cease on the earlier of: [insert date or future event, such as the Alternate Payee’s remarriage], or the date that payments from the Plan with respect to the Participant cease."

I always assumed that this was authorized by IRC §414(p)(2)(C) requiring that a DRO state - “the number of payments or period to which such order applies”.

Question 1:  Upon the termination of benefits to the Alternate Payee, is it automatic that the benefits no longer being paid to the Alternate Payee will revert to and be paid to the Participant?  Is that a Plan by Plan issue?

Question 2:    Based on the provisions of IRC §414(p)(1)(B)(i) that provides:

        “The term “domestic relations order” means any judgment, decree, or order (including approval of a property settlement agreement) which—

            (i) relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant,”

Does the termination of benefits on the remarriage of the Alternate Payee apply only when the QDRO has been entered for the purpose of facilitating payment of alimony to the Alternate Payee; or does it also apply where the QDRO is intended to allocate marital property

Thanks for you input. Citations of authority that I may have missed would be helpful. 

Happy New Year to all  

David Goldberg

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Q1:  Yes, but the plan would do well to clarify this in its (1) QDRO procedures, but it will not, or (2) in its conditional determination of qualification, which should include interpretation of that unusual provision.  Underlying my response is my conclusion that the interest awarded is shared payments in a series of payments to the extent provided in the order (e.g. adequately identifying the first shared payment and the last).  The payments are shared only until they are not.  When the last identified shared payment is made, the series continues unless the series is in the form of annuity payments or installment payments and the last payment is the last payment in the series (e.g. the participant dies under an annuity form of benefit).  The continued payment must go to the participant because the terms of the order no longer provide for the payments to be divided or redirected -- they are restored to full payment to the participant in accordance with the form of payment in effect. Yes, this is inference (which is why it should be clarified by the plan), but what else are you going to infer? Certainly not forfeiture of parts of the remaining payments in the series. The plan administrator should be very demanding (in writing -- the QDRO Procedures or the interpretation) about the identification of the last payment and how and when it is communicated.  For example, the plan should have no liability for payment to the AP after the last identified payment unless the  the last payment is timely and properly  identified in advance, and by persons and means that do not plunge the plan into a controversy about proof of the occurrence or time of the event.  I dare suggest that the plan might refuse to qualify an order that is so indefinite (silent about material information) about identification and communication about the last shared payment.

Q2: I don't see how it matters.  Whatever the basis is under sate domestic relations law for awarding the retirement benefits with this configuration is no business of the plan.

Unsolicited comment #1:  This is another example about how lame, and sometimes wrong, the DOL QDRO publication is.  The DOL jus' don't know QDROs and fails to provide truly useful guidance -- witness the terrible job by the DOL on post-death QDROs when it was directed to issue regulations.

 

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The Employee Benefits Security Administration’s publication, QDROs: The Division of Retirement Benefits Through Qualified Domestic Relations Orders, is not a rule or a regulation. No one need obey it.

Here’s the statute: ERISA § 206(d)(3), unofficially compiled as 29 U.S.C. § 1056(d)(3) http://uscode.house.gov/view.xhtml?req=(title:29%20section:1056%20edition:prelim)%20OR%20(granuleid:USC-prelim-title29-section1056)&f=treesort&edition=prelim&num=0&jumpTo=true.

A pension plan’s administrator might consider whether an order that refers to a contingency the occurrence on nonoccurrence of which the administrator would not know from the plan’s records alone is an order that “clearly specifies . . . the number of payments or period to which such order applies[.]” Likewise, an administrator might consider whether such an order “does not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan[.]”

A lawyer advising a participant or a proposed alternate payee, or a mediator seeking to facilitate an agreement, might consider how a pension plan’s administrator might react to a domestic-relations order.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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My QDRO preparation is located in the DC metro area where, as you might imagine, there are a great number of Federal Government employees.  Various Federal regulations provide: 

1.  The entitlement of a Former Spouse of a FERS or CSRS Employee to receive survivor annuity benefits will terminate if the Former Spouse remarries prior to age 55; and the entitlement is not subject to reinstatement.  In a Military plan the entitlement of the Former Spouse will be suspended (not terminated) if the Former Spouse remarries prior to age 55, but is subject to reinstatement if the new marriage is terminated by divorce or the death of the new spouse.  [Guess how many Military couples divorce just before the potential Former Spouse survivor recipient reaches age 55 only to remarry after age 55.  People who write Federal regulations have no understanding of human behavior.]  

2.  5 CFR 838.221(c)(1)(i), (ii) and (iii), provide: 

 "(c)(1) When court-ordered  payments are subject to termination (under the terms of the court order) if the former spouse remarries,  no payment will be made until the former spouse submits to OPM a statement in the form prescribed by OPM certifying--

 (i) That a remarriage  has not occurred;

 (ii) That the former spouse will notify OPM within 15 calendar days of the occurrence of any remarriage;  and

 (iii) That the former spouse will be personally liable for any overpayment to him or her resulting from a remarriage."

So in my world termination in the event of remarriage is a common topic of discussion.  Notwithstanding that the allocation of retirement benefits between divorcing parties is viewed as an allocation of marital property, once the Employee enters pay status, his/her view of these payments changes from property to income and income sounds like alimony

I agree with QDROphile's comment about the DOL QDRO publication.  But the problem is that "it's out there", and people read it as Gospel.  I have many times prepared QDROs in accordance with model orders that specifically required a statement that "Subsequent remarriage by either party will not affect the terms of this Order." 

And thank you Peter for your citation.  

David

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Oops. On these BenefitsLink discussion boards, many commenters assume a plan is ERISA-governed unless the originating post says or suggests the plan is a church plan, a governmental plan, or something else.

Thank you for helping us with some learning about some non-ERISA plans for U.S. government employees.

And although Maryland has never been my client, other States are (or have been), and I might be able to help if you face an issue about a plan for a State’s employees.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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