QDRO's: May a Plan provide for a distribution to alt. payee prior to EE?

[Guest Mike Pazzo]

Under IRS Notice 97-11 "Sample Lnaguage for a QDRO" under the Appendix to 97-11, Part I, Section D(1)(B) "Comencement of Benefit Payments to Alternate Payee," the DoL states that a retirement plan "...may (but is not required to) allow payments to begin to an alternate payee at a date before the earliest retirement date." IRS Section 414(p)(4) states that no distribution can be made before the earliest retiremenet age. If the Plan does not permit a participant to receive distribution before age 55, then the earliest retirement date is the date that the participant 1) actually retires or 2) reaches age 50. Can you add a provision to a plan, as the IRS Notice states that says "Regardless of whether the participant is entitled to receive a distribution, an alternate payee is entitled to a distribution at any time, even before the earliest retirement date."?

[R. Butler]

Yes. I have seen numerous prototypes that actually do have such provisions.

[Alf]

It is definitely ok. The key is that the earliest retirement age provisions are an exception to the general rule that a qdro cannot require a plan to provide any type or form of benefit or any option NOT OTHERWISE PROVIDED UNDER THE PLAN. The earliest retirement age provisions aren't necessary in a plan that permits alternate payees to receive distributions at any time.