Posthumous QDRO- And Incorrect Plan Named

Participant's divorce decree from a decade ago granted his ex-spouse 50% of the pension benefit accrued during the term of the marriage. No QDRO was ever filed and the participant passed away a few months ago. The ex-spouse has retained an attorney to draft and file a posthumous QDRO. The draft DRO itself is well-written, but the original divorce decree submitted with the draft DRO is a problem. It lists an incorrect plan name and awards the ex-spouse benefits from that plan. There is nothing to indicate the parties ever intended for the ex-spouse to share in the benefits from this plan.

In some cases, a court will grant nunc pro tunc (retroactive) orders to correct clerical errors, etc. However, there are cases stating a retroactive order cannot be used to create new substantive rights that didn't previously exist. In this case its not clear whether the local family law court would modify the original decree, or whether the plan could accept that modified order. (The participant had remarried and there is a viable argument that 100% of the survivorship rights vested in the new spouse at the time of the participant's death.)

Any thoughts or ideas are appreciated. The posthumous QDRO rules from the DOL are not instructive and the cases are all over the board, even after PPA.

You seem to have a good grip on the matter. You are far too generous to the Department, of Labor in its abject failure to provide meaningful post-death QDRO regulations, as it was directed to do. The DoL gets a C- in QDRO class generally. As described, the crux seems to be the intent of the original decree. If that decree is “corrected” to reflect original intent and some sort of clerical mistake in naming the plan, I think the QDRO fiduciary could be more demanding of the state court action in persuading the plan that, in fact, it is a correction of a mistake at the time, and not an opportunistic grab at benefits that were not on the table in the first place. Normally, the fiduciary does not question the domestic relations proceeding, but this is not normal. Under normal circumstances, the domestic relations proceeding is adversarial. If revisiting the original divorce decree is adversarial, perhaps because the subsequent spouse is a party to the action to argue against naming a new plan, the plan fiduciary can be more accepting of the outcome.

Which is your role:

lawyer for the participant/decedent?
lawyer for the would-be alternate payee?
lawyer for the participant’s recent spouse?
lawyer or other adviser helping the plan’s administrator?

How you approach the questions relates to your role.

The decedent’s personal representative might assert that a domestic-relations order now is improper under the State’s law.

The would-be alternate payee might assert that an order now is proper to implement what the divorce decree ordered (perhaps including what otherwise was agreed regarding the divorce).

The participant’s recent spouse might assert that an order now, even if otherwise proper, cannot invade a surviving spouse’s survivor annuity or other survivor benefit.

The plan’s administrator would consider whether an order submitted to it is a DRO and, if so, whether it is a QDRO. Among other points, an administrator would consider whether an order purports to set up a benefit the plan does not provide.

Even if an order is a QDRO, the administrator might consider exposures to competing claims or potential claims.

This is not advice to anyone.

4 hours ago, mal said:

... the original divorce decree submitted with the draft DRO is a problem. It lists an incorrect plan name and awards the ex-spouse benefits from that plan. There is nothing to indicate the parties ever intended for the ex-spouse to share in the benefits from this plan.

IMHO, it would be hasty to assume "clerical error".

I've been told many times from many sources that domestic relations judges are very much disinclined to revisit and modify final orders absent extraordinary circumstances, such as fraud in the original proceeding.  The argument for revisiting because of "mistake" quickly loses effect as time passes and circumstances change. 

I think that the order you found was probably a draft which was never finalized and was therefore never submitted to the court for entry as an order, followed by a plan administrator determination that it was qualified, because some of the terms changed, or negotiations broke down on the fine points of the order, or any other possibility under the sun that you can think up. Perhaps you could contact the attorney or law firm that was involved in drafting the order to find out what happened. At the end of the day, the best result may simply be to let sleeping (and dead) dogs lie.

My comments in all bold type.

Participant's divorce decree from a decade ago granted his ex-spouse 50% of the pension benefit Was it an ERISA qualified plan?  How about providing the name of the plan identified in the divorce decree. accrued during the term of the marriage. No QDRO was ever filed and the participant passed away a few months ago. Did the divorce decree award survivor benefits?  Did the Participant retire during the marriage and name his then spouse as the survivor annui ty of a QPSA and 50% QJSA as required by law?

 The ex-spouse has retained an attorney to draft and file a posthumous QDRO. Pursuant to the PPA of 2006 I assume? The draft DRO itself is well-written, but the original divorce decree submitted with the draft DRO is a problem. It lists an incorrect plan name and awards the ex-spouse benefits from that plan.

26 USC 414(p)(2) provides:

(2)Order must clearly specify certain facts
A domestic relations order meets the requirements of this paragraph only if such order clearly specifies—
(A)the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order,
(B)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,
(C)the number of payments or period to which such order applies, and
(D)each plan to which such order applies.

If the divorce decree does not name the correct name of the Plan you cannot submit a valid QDRO for the correct plan.  

There is nothing to indicate the parties ever intended for the ex-spouse to share in the benefits from this plan. By "this plan" I assume you mean the incorrectly named plan?  If the incorrect plan is named in the divorce decree, wouldn't that be binding.  In my state if the judge says apples, but mean oranges, it's going to be apples unless addressed and corrected in a timely manner by a motion to alter or amend or a motion to revise or an appeal.    

In some cases, a court will grant nunc pro tunc (retroactive) orders to correct clerical errors, etc. However, there are cases stating a retroactive order cannot be used to create new substantive rights that didn't previously exist. Correct. In this case its not clear whether the local family law court would modify the original decree, Res judicata?  Statute of limitations. Laches?  or whether the plan could accept that modified order. (The participant had remarried and there is a viable argument that 100% of the survivorship rights vested in the new spouse at the time of the participant's death.)  In many states the divorce decree will reserve jurisdiction to enter or correct a  QDRO, but you cannot use that language to modify the underlying source of the obligation.  In other words, you cannot use the power of the court to enter or revise a QDRO to modify the language of the document creating the right to the  QDRO, i.e, the MSA incorporated into the divorce decree or, if there was no MSA, then the divorce decree itself. 

As for remarriage and the rights of a new spouse, read:

 Hopkins v. AT&T Global Information Solutions,  105 F.3d 153 (1997) 

Rivers v. Central and South West Corporation, 186 F.3d 681 (United States Court of Appeals, 5th Cir. 1999)  at-
http://scholar.google.com/scholar_case?case=2296953953561556363&q=rivers+central+and+south+west&hl=en&as_sdt=2,9

Dahl v. Aerospace Employees' Retirement Plan, a 2015 case from the U.S. District Court for the Eastern District of Virginia (and cases cited therein) - 
https://scholar.google.com/scholar_case?case=3487596170773082469&q=dahl+v.+aerospace&hl=en&lr=lang_en&as_sdt=20000003&as_vis=1  

See also Vanderkam v. PBGC, 943 F. Supp.2d, 130 (2013) setting forth a thorough discussion of this issue.  And the 2015 case of Dahl v. Aerospace Employees' Retirement Plan, No. 1:15cv611 (JCC/IDD), United States District Court, E.D. Virginia, Alexandria Division.
https://scholar.google.com/scholar_case?case=3487596170773082469&q=dahl+v.+aerospace&hl=en&lr=lang_en&as_sdt=20000003&as_vis=1
 

Any thoughts or ideas are appreciated. The posthumous QDRO rules from the DOL are not instructive and the cases are all over the board, even after PPA.

Attached find a recent rough memo re: Post Mortem and nunc pro tunc QDROs.

You also need to address the role of the Plan Administrator in looking behind the language of the QDRO submitted to  them.  Her is a letter that I sent to a Plan Administrator: 

I want to bring the following matters to your attention. 

        1. The QDRO I prepared was approved by both parties.

        2. The QDRO was signed by the Court and a certified copy forwarded to you.

        3. By law you act as a fiduciary with respect to both parties. ERISA § 404(a)(1) and ERISA § 409.

    I would like to bring to your attention a number of relevant authorities that deal with your ability as the Plan Administrator to “look behind” a QDRO that has been submitted to you.

    A 1992 ERISA Advisory Opinion suggests a plan’s administrator need not review the correctness of a State court’s decision about whether a person is, under a State’s domestic-relations law, the participant’s spouse, former spouse, child, or “other dependent”. See ERISA Adv. Op. 92-17A (Aug. 21, 1992) (A plan’s administrator may treat as a participant’s former spouse for QDRO purposes a person the State court decided was never the participant’s spouse.)-
https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/a
dvisory-opinions/1992-17a.pdf.

    Brown v. Continental Airlines, Inc., 647 F.3d 221, 223 (5th Cir. 2011) (“[ERISA § 206(d)(3)(D)(I)] does not authorize an administrator to consider or investigate the subjective intentions or good faith underlying a divorce.”) -
https://casetext.com/case/brown-v-continental-airlines-inc.

    See also Blue v. UAL Corp., 160 F.3d 383, 385 (7th Cir. 1998) (“ERISA does not require, or even permit, a [retirement plan] to look beneath the surface of the order. Compliance with a QDRO is obligatory[.]”) -
https://casetext.com/case/blue-v-ual-corporation#p385.

    And see Matthew v. E.I. Dupont, 3rd Cir. 2017, citing Blue and Brown: “Additionally, DuPont's interpretation subverts the deferenceowed to state-court QDROs by ERISA plan administrators. Our sister circuits have explained that "ERISA does not require, or even permit, a pension fund to look beneath the surface of the order." Brown v. Cont'l Airlines, Inc., 647 F.3d 221,227 (5th Cir. 2011) (citations omitted); see also Blue, 160 F.3d at 385. Here, the terms of the QDRO support Matthews' interpretation.”

Attached are a few advisory opinions that may or may not be helpful.  

Good luck.

David
 

POST MORTEM and nunc pro tunc QDROS.pdf DoL Advisory Opinion 1990-46A.pdf Advisory Opinion 1999-13A _ U.S - Sham Divorces.pdf Advisory Opinion 1992-17A - duty of Plan Admin.pdf

Thank you for the input. Below are answers to some of the questions raised. 

• I'm coming at this from the plan's perspective and want to ensure the rights of all parties, and the plan, are protected.
• This is an ERISA plan.
• Additional information indicates there was likely a good faith mistake in the original decree. Work was performed in one area, but benefits accrued in another. It is a multiemployer plan and a reciprocal transfer authorization form was signed by the participant. This means contributions were paid to the plan in City #1, but transferred to the plan in City #2. The original decree named the City #1 plan, but the vesting, service credit and benefit accrual all occurred with the City #2 plan. 
• Original divorce decree assigned 50% of the marital benefit, noted a QDRO would issue, but named wrong plan. Very little detail otherwise.
• Participant had not reached retirement age, but was remarried for more than one year at the time of death. 

The case law, although inconsistent, suggests to me that the ex-spouse would likely have a difficult time in a contested fight to: 1) alter the original decree that is now a decade old; and 2) obtain approval for a posthumous QDRO. The hope is that the current and ex-spouse are cooperative with one another and find a solution to avoid litigation or an interpleader action.