1996 QDRO submitted for first time to new plan in 2026

[Friend of Plan Admin]

DRO (titled "QDRO," and which facially meets QDRO req's) was issued by state court in 1996 dividing husband's account in a 401(k) plan (the "Old Plan") equally between husband and ex-wife as of a certain date in 1996, including "any earnings and losses on [the divided] sum from said date to the valuation date preceding distribution." QDRO stated that ex-wife's "sum shall be left in [Old Plan] but transferred to the name of Alternate Payee as soon as practicable after the order is deemed qualified and following receipt of a certified copy of this order by the Plan Administrator." It appears this 1996 QDRO was never submitted to Old Plan. Over the years, Old Plan underwent a number of successions based on company mergers and acquisitions, and in 2022 was being administered by what I'll call "Intermediary Plan." In 2022, plan sponsor of Intermediary Plan sold a portion of its business to a new company, which then created its own 401(k) plan ("New Plan"). Husband's account in Intermediary Plan was transferred from Intermediary Plan to New Plan via a 401(k) to 401(k) trustee to trustee rollover, i.e., a non-taxable distribution.

Now, nearly 30 years after the 1996 QDRO was first issued, husband died and ex-wife submitted the 1996 QDRO to New Plan (husband's entire account in New Plan would otherwise pass to deceased husband's new wife). It appears to New Plan that this was the first time the QDRO has ever been submitted to any plan. New Plan contacted Intermediary Plan about the existence of any QDRO and Intermediary Plan stated that it had no record of any QDRO related to husband at all. None of New Plan's records, including those relating to the 2022 rollover, state anything relating to the existence or possible existence of a QDRO. New Plan doesn't know what to do. Even if the QRDO is valid as to the New Plan (which seems unlikely, especially given the 2022 distribution), New Plan seems unable as a practical matter to account for any amount that might be owed to the ex-wife because New Plan has no idea what the value of the account was on the date it was putatively divided in 1996, and all of the subsequent contributions by husband and/or his employer after the division date (and the growth/loss thereon) would be his alone.

Any input on this unusual situation would be greatly appreciated. It seems to me that 1996 QDRO is inapplicable to New Plan (because New Plan is not legally a successor to Old Plan and/or Intermediary Plan, though I'm not 100% certain of this conclusion), meaning New Plan should distribute the account to new wife. But maybe the best thing for New Plan to do is file an interpleader and let the court sort it out? Or perhaps ask ex wife to go back to state court to try to obtain a QDRO directed to New Plan?

Thanks in advance!

[ESOP Guy]

Wow and good luck with this one.   

[QDROphile]

Just for the fun of it, disregard all of the plan history, adequately recounted or not, except the “fact” that no domestic relations order was ever submitted with respect to the participant until now. The plan receives a domestic relations order that it cannot reasonably implement, largely due to the passage of 30 years. I have been out of law school for more than 30 years, but I think the concept of laches is still valid.

There are several ways to go from there, possibly one that would give the ex-spouse a shot at some benefit (almost certain to fail at its inception in state court). Interpleader is not one of the ways to go. The plan has an obligation to process the domestic relations order in accordance with the law and applicable procedures, including its QDRO procedures and claims procedures.

In the plan’s disposition of the domestic relations order it might want advice of legal counsel. It surely will not be guided  by the superficial consideration of strangers.

[Peter Gulia]

Without remarking on the many other issues:

A plan’s administrator might want its lawyer’s advice about whether—before beginning a further evaluation of whether the writing presented meets conditions to be a domestic-relations order and, if so, a qualified domestic-relations order—the administrator might first take prudent steps to confirm that the writing is a court’s order.

Consider, after considering surrounding facts and circumstances, asking the court itself for a certificate that the writing is the court’s order. And consider prudent steps to detect, independently, whether a certificate is a forgery, or was unauthorized.

While doing that might not be a plan’s regular procedure for an order the plan received reasonably promptly after the order’s date, a delay of 30 years might suggest a presumption of regularity no longer is fitting.

And while a suggestion to get one’s lawyer’s advice often is unheeded, this situation seems to involve unusual risks (and so more value in careful procedure and careful communication).

This is not advice to anyone.

[Friend of Plan Admin]

Appreciate everyone's input here. This is indeed a messy one. Assuming for sake of argument the DRO is actually a valid court order, it would nonetheless seem to fail the requirements of Code section 414(p) and ERISA section 206(d)(3) -- at least as to New Plan -- that the DRO must clearly specify "each plan to which such order applies" because the DRO is only directed at Old Plan. The DRO makes no express mention of applying to any successor plans. Thoughts?

[fmsinc]

Random comments:

Some states have statutes of limitation with respect to the entry or enforcement of a QDRO.  This happens most often  in states that view a QDRO as a judgment rather than a Court Order intended to implement another court order - the Judgment of Divorce. 

Other states will examine laches - https://www.law.cornell.edu/wex/laches

Another problem is that even if you can trace the plan form then to now, the most recent plan will not have the historical records necessary to adjust for gain and losses and investment experience.  This is a problem that I deal with today everytime the in-house Plan Administrators changes its TPA (record keeper).  Adjustment for gains and losses can only be made from and after the new TPA is hired. I think this is BS, but nobody has the money for a court battle. 

You best bet is an interpleader.  Let the former spouses fight it out and the judge decide.  Your task is ministerial.    

N.B.  I have had QDROs where the Judgment of Divorce was entered as far back as 1993 and no QDRO was entered until the 2010s and it was  possible to trace the Plan to date.    

CYA

David

[HRagain]

Not a direct answer, but a thought. Does the ex-spouse have a copy of any prior 401k statements that show a balance at or around 1996? I would think those would have been requested by counsel (hers) and kept in their related files to prove up any QDRO calculations or amount expected.  1996 was right at the cusp of daily mutual funds so it is possible old fashioned quarterly statements were still being used (I was still working recordkeeping back then).  I doubt the new spouse would still have the old records unless the Participant was great personal financial keeper of their own records.  

Are you 100% sure it was never submitted to the plan administrator/employer? I'd be a little concerned there! Depending on who the recordkeeper was back then -  I worked for a larger well known one but also took over plans from smaller ones where this could have happened/been sitting.

I'd definitely be seeking legal counsel!  

[QDROphile]

“… seem to fail the requirements of Code section 414(p) and ERISA section 206(d)(3) -- at least as to New Plan -- that the DRO must clearly specify "each plan to which such order applies" because the DRO is only directed at Old Plan. The DRO makes no express mention of applying to any successor plans. Thoughts?”

I would not plant my flag there. The requirement for properly identifying the plan is for the benefit of the plan administrator and the avoidance of ambiguity. Your presentation of the facts tells me that there is no ambiguity and the plan administrator, or other QDRO fiduciary, knows perfectly well that the order applies to an account under the plan. I see no failure to identify the plan, in fact. The information to identify the plan from the plan identified in the order is within the knowledge of the plan administrator.  I would not want to be in front of a federal judge (after the ex spouse exhausts the claims procedure) making that argument for my decision that the order is not qualified and should not be given effect. The better argument is that the delay in submitting the order to the plan makes it impossible for the plan to give effect to the terms of the order as a practical matter and also potentially encroaches on the interest of a plan beneficiary, the subsequent spouse, to whom the plan owes a fiduciary duty. 

[Friend of Plan Admin]

Thanks for your input QDROphile. I agree with your point that the the delay in submitting the order to the plan makes it impossible for the plan to give effect to the terms of the order as a practical matter and also potentially encroaches on the interest of a plan beneficiary, the subsequent spouse, to whom the plan owes a fiduciary duty. But I'm not sure how the plan can best act upon that argument given its duties to both the new spouse and the ex spouse too. Perhaps there's a different argument that the order is not qualified because, at least as to the new plan, it fails to specify "the amount or percentage of the participant’s benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined" given that the new plan was created in 2022 and has no ability to determine the value of the account as of a date in 1996?

To be clear, I do not think the new plan knows for certain that the order does apply to an account under the plan. The plan knows the order references a deceased participant who holds an account under the plan, but it is not certain that such account is subject to the order. For all the plan knows, the ex spouse might have already had the QDRO satisfied by the original old plan (the plan to which the order is directed by name) sometime back in the 1990s by creating a separate account for her. The new plan is not certain the the old plan never received the order, only that the intermediary plan never did.

The plan is continuing to try to gather more facts here and I will provide updates as I can. I continue to appreciate everyone's input. It is very helpful.

[fmsinc]

You should keep in mind that computers were not widely used until the late 1990's.

IBM AT - Release Date: August 14, 1984. Original Price: Approximately $6,000 (around $19,400 adjusted for inflation). Discontinuation: April 2, 1987. Processor: Intel 80286 running at 6 MHz and later 8 MHz.Memory: 256 KB to 512 KB  

IBM XT released in 1984. Maximum conventional memory space of 1 MB

I had both. Data on a failed motherboard could not be retrieved. Everything has to be backed up on  floppy discs - 5-1/4"  and 3-1/2".  "A" drives don't work on computers with Apple OS or  computers running after Microsoft Windows 7.  

See attached:  

Not everybody used these computers until the Wide World Web was created by Tim Berners-Lee in 1989.  

So you should not assume that anybody will have computerized or retrievable records that will help you find the answer to your questions.  You are more likely to have records that were  trashed long ago (no "shredding in those days either).

The burden of proof is on the parties. 

Old legal maxim:  "In court it doesn't matter what's true.  It only matters what you can prove to be true."   

Niels Bohr: ""nothing exists until it is measured".

Christopher Hitchens: "That which can be asserted without evidence, can be dismissed without evidence."

Carl Sagan: "Extraordinary claims require extraordinary evidence." 

Did the REA of 1984 address the issues that would have been applicable in 1996? 

David