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QDRO - How to apply plan limitations


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DBP with limit on lump sums (PVAB < $50k)

In a separate interest QDRO, would this apply individually to the participant's and AP's respective portions or to the pre-split benefit in total? Checking if the plan's QDRO provisions have any exceptions to that LS limit, but looking for opinions in case there are no exceptions.

I can see both sides - AP is treated as a separate participant with separate benefit, so apply separately, but the flip side is if total PVAB is >$50k, say $80k for example and participant can take a $45k LS and AP a $35k LS, then the plan will have been forced to pay a LS total on the one (albeit split) benefit in excess of the plan's $50k limit.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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To take it one step further, the plan cannot be required to pay benefits in a form other than, or an amount excess of, what the plan is designed to pay as a regular benefit. That allows the plan to interpret in a manner that allows consistency in administration, and making sure that, however it interprets its terms, it does not have to pay a lump sum amount, in the aggregate, greater than the plan was designed to pay if there were no QDRO. If the DRO asserts otherwise, it is not qualified. 

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Agreed. Once we got to "not treated as a separate participant" that all fell in line. 

 

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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