Three DB QDRO questions

[AndyH]

1. In a plan with a REA-only death benefit, can a QDRO name the participant as the spouse for purposes of a QPSA benefits of the ex-spouse in a Separate Interest QDRO (i.e. 50 % of accrued benefit as of date x is assigned to ex-spouse, 50% remains benefit of participant)?

2. Can a participant name the (ex-spouse) alternate payee to be treated as the spouse for purposes of the participant's remaining (50%) share for the QPSA only, but not the QJSA, again assuming a Separate Interest QDRO.

I ask this wondering how to avoid the need for the participant to ask the spouse 20 years or so from the divorce date to give spousal consent to a form other than a QJSA (with ex-spouse as beneficiary), but to preserve some death benefit in event of premature death while divorced (not re-married).

3. Can a Separate Interest QDRO stipulate that the ex-spouse be treated as the spouse for QPSA and QJSA but only up until such time as the participant remarries?

[QDROphile]

All responses are qualified by requiring reference to the terms of the plan and the plan's written QDRO Procedures. Note partial inversion of order of response.

2. Yes, except it is the order, not the participant, that must designate the alternate payee as the surviving spouse with respect to some portion of the QPSA only. The wording is sensitive.

3. Yes.

1. Probably not, but you have gone overboard in your definition of "separate interest" QDRO. I work the plan side, not the particpant side. My preference is to have tha alternate payee's interest lapse if the alternate payee dies before starting benefits, and the participant's benefit is restored. There are related details that I won't go into. You may have some section 401(a)(9) and other issues if you think you can assign a QPSA to an alternate payee that allows a death benefit after the alternate payee's death.

[AndyH]

Thank you for your comments. Very interesting. In the situation prompting these questions, we're on the plan side, but it's the CFO of the plan sponsor who is getting divorced and asking these questions. There seems to be a shortage of attorneys well versed in these matters.

Our legal staff could not see a way to separate the QPSA and QJSA consents (i.e. one but not the other) That is not to say they reject it, just are having trouble accepting the ability to break it apart as a result of the language in the Code.

The idea of restoring the participant's benefit is fascinating.

One thing I find odd is that the DOL/IRS' model language has optional language for the alternate payee being treated or not treated as the spouse, but not the same option for the participant.

I have followed your comments on similar questions on these boards with great interest, so I appreciate the feedback.

[QDROphile]

414(p)(5) says "To the extent provided in any qualified domestic realtions order ...." So one could provide that the AP is a surviving spouse to the extent of a QPSA but not to the extent of a QJSA. Most people don't want to give an AP QJSA rights with respect to the participant's remaining benefit. That would be double dipping for the AP.

My problem is usually with an order that simply says that the AP is treated as the spouse when I know that they don't really want the QJSA on the participant's remaining benefit. I draft QDRO procedures that say in order to get the QJSA the order has to provide for it expressly and that a mere mention of treatment as a spouse won't be sufficent. The notice of qualification also makes note of the issue and results.