QDRO Interpretation

[ConnieStorer]

I am posting this message for my boss.  He is the one who normally reviews QDRO for our clients and advises if they can be implemented.  Attached is a summary of sections from the Divorce Decree and the QDRO draft.

Also included are comments made to the attorney regarding the QDRO along with the attorney's response.  We have some real issues with the attorney's response and wanted to reach out to the Benefit Links community for any insights.

Thanks in advance for all comments.

Not sure if it makes any difference but the participant stated to us that his spouse was entitled to the exact amount listed in the divorce decree, not a penny more or less.

Amount of Alternate Payee.docxAmount of Alternate Payee.docxAmount of Alternate Payee.docxAmount of Alternate Payee.docx

[david rigby]

I'm not sure you (or the plan) cares what is in the divorce order.  Look to the DRO (that hopes to become a QDRO) for any "instructions". 

I see a recipe for error if the attorney and/or the DRO expect the plan to use some "implied" standards or procedures.

[Peter Gulia]

Apart from other observations one might consider:

If the plan is ERISA-governed, the plan’s administrator (or its service provider, if it speaks for the administrator) might inform the inquiring domestic-relations lawyer:

A State-law construction aid that the absence of an expression means a measure includes gains and losses is useless for an order one wants treated as QDRO. ERISA alone governs how an ERISA-governed plan reacts to a State court’s order. An order that does not “clearly specify” its instruction cannot be a QDRO.

This is not advice to anyone.

[Calavera]

Here are my $0.02. I would agree with the attorney and disagree with your boss:

1. Process of a DRO qualification doesn't require a comparison between A DRO and a divorce decree.
2. You only need to determine if a DRO could be administered as written (along with other qualifications such as names, addresses, etc.).
3. Second paragraph of Item 6 is needed for a DRO, so it can be administered. Just imagine a case when the total account is less than the amount specified in a DRO. You will never be able to administer it. If you are certain that the total account is higher than the amount written in a DRO, then second paragraph has no impact.

3 hours ago, ConnieStorer said:

Not sure if it makes any difference but the participant stated to us that his spouse was entitled to the exact amount listed in the divorce decree, not a penny more or less.

4.  If the participant insists on a "non a penny less", the divorce decree will need to be amended to instruct what to do if the total account balance is less than the amount specified. However, you cannot pay more than is in the account, so the second paragraph of Item 6 is still needed.

[QDROphile]

I agree with Calavera, except I am more emphatic that the divorce decree language deserves absolutely no consideration. If the divorce decree was submitted with some suggestion that it had meaning with respect to the domestic relations order, the plan should state, as part of its interpretation of the domestic relations order, that the divorce decree was not considered in the process of determining qualification or the amount of the award.

I also believe that state law is irrelevant if it is an ERISA plan. If the DRO does not specify earnings and losses, then it is a sum certain. The participant’s opinion is irrelevant and the drafting lawyer is wrong if the lawyer expects an earnings adjustment.

I hope that the account services/investment provider is not Fidelity. Unless Fidelity’s policies have changed since my last encounter, it is impossible to pay a specified sum to an alternate payee. However, as much as this offends me, there should be no harm because, in the end, the alternate payee should receive a bit more without the participant receiving less if no one interferes.
 

[QDROphile]

Although I am critical of the drafting lawyer, I think it is an appropriate courtesy, as well as best practice, for the plan to communicate expressly that the awarded amount will not be adjusted for earnings and losses (setting the Fidelity problem aside). This is typically done in the notice that the DRO has been determined to be qualified and the relevant interpretations of how the plan will execute the QDRO. Given the communication history so far, that message might better be delivered in some other way before processing the DRO.

[ESOP Guy]

Add me to the voice your firm is doing too much work and opining on things it shouldn't.  We do not normally get and wouldn't look at if we got the divorce degree.  Our job is to determine if the DRO is a QDRO.  We are not domestic relationship lawyer and we have no interest in getting between to spouses in the process of ending their marriage. 

 

[Peter Gulia]

BenefitsLink neighbors, what do you think about this:

I have sometimes considered whether a plan administrator’s domestic-relations-order procedure might include these points:

If a submission includes any document beyond the court order someone asks the administrator to recognize as a QDRO, return those documents to the submitter. Do that with a letter to both litigants and each’s representative (if any) stating that the other documents were not read, and are ignored.

If the court order someone asks the administrator to recognize as a QDRO “incorporates by reference” a divorce decree, settlement agreement, or other document, state the administrator’s finding that the order is not a QDRO because the order does not “clearly specify” its instruction to the plan’s administrator.

Is this a good idea, or a bad idea? Why? What are the potential disadvantages?

[Paul I]

I agree with the advice that the DRO be reviewed without regard to the divorce decree, and I would not consider a DRO is a QDRO if it incorporates other documents by reference primarily because of a lack of control over the content of these other documents.

I agree that the reviewer of the DRO should not be giving advice to either party about the terms of the DRO beyond what content is needed to be clarified to gain approval as a QDRO.

The authority for approving a QDRO on behalf of the plan should be explicit in the plan document.  Service providers can opine to the holder of that authority on whether the terms of the DRO can be administered (and be able to explain if not, then why not) so an informed decision can be made.  A service provider having final say if a DRO is qualified without having been delegated that authority is putting itself at risk of being challenged by either party to the DRO or plan fiduciaries.

Just my thoughts.

[Peter Gulia]

Paul I, thank you for adding your voice.

About the idea of informing the domestic-relations lawyers that the plan's administrator does not consider, and does not read, documents beyond the court order itself, what do you think--wise, or unwise?

[Paul I]

This is a question where the answer is based on the demeanor of the lawyer and using discretion to get to the ultimate goal of having a valid QDRO.

I have seen lawyers who try to bully plan administrators into including in the DRO that are biased to the lawyer's client.  Any conversation with them generally starts out with a comment like "I have done 5,000 QDROs and they all accepted this language..."  

I have seen lawyers who worked very hard on the divorce decree who were adiment that the decree superseded the DRO.

I have seen lawyers put the idea in the head of the alternate payee that the plan administrator is favoring the participant to the detriment of the alternate payee.

I have seen lawyers who ask politely what needs to be done to get the DRO approved and have been responsive.

As Detective Joe Friday migth say, "All we want are the facts" to move foreward.

[fmsinc]

There is not enough information provided to respond to ConnieStorer.  I would need to see

the ENTIRE divorce decree and

the ENTIRE draft QDRO and

EXACT name of the Plan so I can determine is it is ERISA qualified, or a Federal, State, County, Municipal, City, or local plan and 

the State where the case is pending and

the State law applicable to pension and retirement plans. This is not always the same as the forum state.  For example: 

In the Matter of the Marriage of Morris, No. 40978-3-III, Court of Appeals of Washington, Division Three, Unpublished, (April 14, 2026) -
https://scholar.google.com/scholar_case?case=2690551257535625082&hl=en&lr=lang_en&as_sdt=20006&as_vis=1&oi=scholaralrt&hist=bY5nDLcAAAAJ:14880692104701005079:ADi0EEUaQFSNuk2i3r1tCfq2RXAZ&html=&pos=0&folt=kw
deals with a conflict between two states that approach the allocation of a State Sponsored defined benefit (pension) Plan in different ways.  One state declares that the Alternate Payee’s share is to be paid as what we could call a “separate interest”,  and the other requires the Alternate Payee’s share to be paid as what we would call a “shared interest” (if, as and when).   

whether or not ConnieStorer represents the Plan Administrator

Every time I try to respond sort of inquiry I will eventually find out that there were a few matters that were not mentioned and that I have wasted my time.   

This does not look like a question of whether or not the QDRO can be implemented.  The question is what the parties intended and what the language means and what should the Plan Administrator do to avoid being put in the middle.    

Here are two memos that might be helpful on the gains and losses issue.   

David

GAINS AND LOSSES AND INVESTMENT EXPERIENCE 02-04-2025.pdfOWNERSHIP INTEREST - 5 CFR 838.237(b)(3) - 01-08-2026.pdf

[QDROphile]

Sorry, Peter. I am not going to respond to your request about what written QDRO procedures should provide with respect to incorporation of terms. I would have to spend a lot of time trying to deal with the issue of what constitutes a document. It is not as easy as counting staples.
 

I do think it is appropriate to add to this thread that determination of qualification of a DRO and interpretation of a QDRO for purposes of implementation is a fiduciary matter. Persons involved on behalf of the plan in the process at any stage need to understand if they are acting in a fiduciary capacity or not. It would be a best practice to formally appoint the QDRO fiduciary, whoever that is, as a fiduciary to avoid misunderstanding.