Determination of Shared Interest for Prospective DRO in DB Plan Based on Marital Settlement Agreement

[rocknrolls2]

A married couple divorces. They reoch a marital settlement agreement  providing for the entry of a shared interest QDRO under a defined benefit plan. Based solely upon the terms of the settlement agreement, the plan's administrator proposes to implement a deternination of the shared interests of the parties, which is driven by the fact that the partidcipant is about to retire. May the plan's administrator appropriately determine the separate interests of the parties prior to the court's entry of the DRO and the plan administrator's determination that such order is qualified?

[QDROphile]

What do you mean by “determine”? The PA might be able to give a very accurate estimate. The plan can’t determine anything except on the basis of a DRO. Is the settlement agreement the DRO? The plan can advise if the order appears to satisfy the formal requirements for qualification.

[rocknrolls2]

For this purpose, "determine" is synonymous with "calculate.' No DRO has, as yet, been presented. Perhaps that could justify the triggering of the 18-month period to at least wall off the portion of the benefit that would not be payable to theparticpant pending the presentation of the DRO. Otherwise, the plan would commence payment of the participant's full benefit payment notwithstanding the presentation of the DRO after payments commenced. 

[Peter Gulia]

The pension plan’s administrator might re-read carefully and thoughtfully consider the administrator’s procedure about domestic-relations orders.

Some administrators are “strict constructionists” and do little or nothing until the administrator has received a court’s order.

Other administrators provide some help to a domestic-relations litigant’s lawyer before a court makes an order.

(I would not suggest that help unless the plan’s risks of harm from inept domestic-relations practice outweigh the risks from helping, and the administrator gets a deeply knowledgeable lawyer to design the procedure.)

A prudent administrator usually prefers to follow its domestic-relations-order procedure and its claims procedure.

If a procedure needs a redesign, do it before handling a particular situation.

This is not advice to anyone.