fmsinc Posted February 21 Posted February 21 I enjoy reading posts on this terrific blog,, however, I find that I cannot get answers to questions that are of vital concern to me and many of my lawyer colleagues, and that are destined to result in issues for Plan Administrators as well. The topic - the allocation of pension and retirement plans between divorcing couples via a QDRO or similar Court Order. In 2022 there were 673,989 divorces in the United States. There are about 163,000 ERISA qualified pension and retirement plans in the US plus another 12,000 plans governed by other sections of Federal law (FERS, CSRS, Military, to name a few), plus State, County, Municipal plans that operate pursuant to local laws and regulations, and International plans. I have been trying since Secure 1.0 to determine how Secure 1.0 and now 2.0 will interface with defined contribution plans where historically the Alternate Payee's share has paid in the form of an immediate lump sum either: (i) tax free to the Alternate Payee's IRA or other qualified retirement plan, or, (ii) in the form of a taxable distribution directly to the Alternate Payee, but no 10% early withdrawal penalty. The main question is whether or not the election by a Participant in a defined contribution plan of an annuitized payout pursuant to Secure 2.0 during the marriage can be superseded by a subsequent QDRO entered by a Court pursuant to State law directing a lump sum payout, and how will that payment be computed and paid? It is not clear to me whether or not a Participant can make such an election prior to retirement. And if it is possible for the Participant to purchase an annuity during prior to retirement and during the marriage without notice to or consent by the spouse. Timing of events is critical to the rights and responsibilities of the parties. Federal preemption is an every present sword of Damocles. Plan documents and options vary and usually rule. I participate in quite a few other QDRO oriented blogs and nobody seems to have any answers. Am I the only one that is worried about this? Or is it just the OCD required to afflict all members of the Bar. Since pension and retirement benefits represent one of the two highest value assets owned by the parties (the equity in their home being the other), that is an important matter. In my world the tide is rapidly receding exposing the ocean floor, reefs and fish, and the birds and animals are heading for high ground. Watch the 2012 movie "The Impossible". Spoiler alert - DO NOT watch the trailer. It is a great movie. David Goldberg
justanotheradmin Posted February 21 Posted February 21 Just FYI - you don't need to put your question in more than one topic thread. Many regular readers and commentators view the most recent posts on the "Latest Messages" part of the website - which shows recent /active post across ALL topics. So posting in the QDRO thread and the 401(k) plan thread really isn't necessary and it is better to have responses consolidated under a single one. Maybe consider deleting this one? I'm a stranger on the internet. Nothing I write is tax or legal advice. I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?
Effen Posted February 22 Posted February 22 See duplicate thread for responses. 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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