Anticipated QDRO during Plan Termination

401(k) PSP. Plan is in termination and we are in the process of paying out all accounts. Participant notified us today that he's had a divorce pending for 2 years and they are waiting on judge to approve divorce settlement. Participant indicates that ex will be receiving a portion of his 401(k) and will not sign the rollover consent. 

Plan requires spousal consent for rollover. Any suggestions on how to proceed? I could not find this in the pending topics, perhaps I didn't use the same terminology to search. Thanks in advance. 

Even assuming all you describe and that the spouse assumes it’s not feasible to obtain a QDRO before the plan’s final distribution, there are opportunities for a spouse to ask the domestic-relations court for its orders to help guard the spouse against risks that the participant dissipates or hides money or other property before the spouse collects the spouse’s share.

That’s the business of the domestic-relations court, not the plan’s administrator.

Are you sure the plan (as amended) requires a qualified election with the spouse’s consent? Usually, an individual-account profit-sharing retirement plan’s final distribution is an involuntary single-sum distribution, and does not require a spouse’s consent or even a participant’s consent. (Else, how would the plan’s fiduciaries complete the plan’s termination?) If so, it would be unusual to provide that a participant without one’s spouse’s consent cannot instruct a direct rollover, and must get money paid to the participant.

If the plan’s administrator furnished to the participant, the spouse, or either’s attorney or other representative the administrator’s QDRO procedures:

If those QDRO procedures include a hold when the administrator receives notice that a domestic-relations order is anticipated, the administrator might consider, with its lawyers’ advice, amending the procedures and, if amended, furnishing the revised version.

This is not advice to anyone.

Peter, thanks. This PSP has money purchase rollover on some of the participants who have been in the plan a few decades. I believe that is why the spousal consent requirement remains in place. Thanks much for your input!

Don't make payments to anybody.  Do so at your peril. 

You have actual notice of a forthcoming QDRO.

One option is to file an interpleader and deposit the money into the Registry of the Court.  

Or, if the participant and the spouse might still be spouses when the plan’s final distribution is to be paid or delivered, the plan’s administrator might want its lawyer’s advice about whether to obtain a qualified-joint-and-survivor annuity contract (for the portion of the participant’s account that is subject to the QJSA protection), interplead all claims and rights and petition for equitable relief in the Federal court for the district in which the plan is administered (or the Federal court the plan provides as the exclusive forum, if the plan so provides), and deliver the money (if any) and the annuity contract to that Federal court.

But, as I imagine Kansas401k suspects, it might be simpler to help the divorcing persons get to conclusion and a QDRO before the plan’s final distribution.

This is not advice to anyone.

Let them know you'll be buying an annuity with a QJSA unless they can get you a finalized QDRO? They can't hold the Plan termination hostage by saying we don't have a QDRO 2 years on.