Non-PBGC DB Plan Closedown. Spouse won't sign. Company being acquired.

[Guest_Question]

There is a small professional DB Plan not subject to PBGC in closedown. All benefits have been paid except the 2 principals and the principals' child. The principals' child is in the middle of separation from spouse. There is no QDRO in place and the separation is being drawn out. Future ex-spouse won't sign the spousal consent so that the money can be distributed. The company is being acquired with one condition being that this plan has been fully closed and distributed by end of the year. Participant is on the younger side with Lump Sum in the few hundred thousand $ range. Is there any ground to be able to waive the spousal consent because of plan closedown? What is the best course of action?

1) Give the money to PBGC? (not ideal for anyone)

2) set up a generic IRA as if the participant was being forced out/couldn't be located? 

3) Waive the spousal consent and distribute to the participants IRA?

4) Distribute it out under participant election and correct under EPCRS once consent can be obtained?

I appreciate any help.

[Lou S.]

Purchase an annuity with a J&S benefit?

I don't think the other options are acceptable for a DB plan unless you'd like to be on the hook for a claim from the spouse.

[Bri]

Kind of a smart spouse there to know the ERISA protection available!

[CuseFan]

Or give the soon to be ex a partial legal settlement now from other assets in exchange for spousal consent and agreement to not include such in future property division? This is where the lawyers earn their money.

[Jakyasar]

When you say separation, is it a divorce? Are they already legally separated? A good lawyer will tell you what can be done.

Or, draft a legal agreement (assuming no QDRO will be issued) that provides how the assets will be divided upon a divorce.

Such a sticky situation.

[Peter Gulia]

If a negotiation with the young participant’s spouse is not concluded with time to pay or deliver all final distributions by the discontinued plan’s scheduled final-distributions date, might the plan’s trustee buy—and deliver to the participant—an insurance company’s annuity contract that includes a qualified joint and survivor annuity and a qualified preretirement survivor annuity?

We recognize that might not be what one or more of the persons involved might like, but it is a way to end the pension plan.

Further, a potential division of the annuity contract rights would not involve the pension plan’s administrator.