Alternate payee died before QDRO was written

I have a unique case where there was a separation agreement that stated the husband would receive 50% of the wife’s IRA by QDRO. No QDRO was written. The husband died a few weeks after the divorce. This is in Ohio. Can a QDRO still be written with the estate receiving the funds? It has been a year since the death. Would the amount be based on the amount in the account at the time of the writing of the separation agreement, or at the time of the writing of the QDRO? Thank you. 

Let me be the first to offer you ultimately unhelpful responses.  
 

1.  The division of IRAs does not involve qualified domestic relations orders (QDROs). A different section of the federal tax code applies. It is possible that the separation agreement meets the requirements for the division of the IRA.

2. Depending on what the separation agreement says and the status of the separation agreement under Ohio domestic relations law, the divorce documentation might be effective to provide for transfer of the interest in the IRA to the decedent’s estate, without more. Or, Ohio domestic relations law will govern the ability (or not) to modify or supplement the existing documentation to effect the division.

3. The drafter of the domestic relations documents (one would hope for a competent lawyer) would be a good place to start to figure out where this stands and where it might go.

I am curious about what “I have a unique case” means. Are you an Ohio lawyer?

Thanks. I am not an attorney, but rather a family member. The plan administrator says he has never had such a situation before. Likewise, the attorney has not had the a similar situation in the past. Searching online, I have not found this exact situation, so it does seem to be unique/ unusual. We have brought in an additional attorney who works specifically with QDROs. The separation agreement does state that a QDRO should be done to split the retirement. 

Who is the named beneficiary of the IRA? 

The beneficiary form governs in matters like this. The fine print of the typical IRA beneficiary form probably makes that clear. 

Typically, IRAs are in custody of Banks or brokerages and there is no "plan administrator." The institutions won't pay based on a separate document. Are you sure this is an IRA?

Maybe I was not clear. It is the wife who owns the IRA and is still living. The husband passed away a few weeks after the divorce and was supposed to be given 50% of the IRA. Does that make sense? Or maybe I am not understanding your question.

Additionally,” plan administrator“ was probably not the right term to use but rather “financial advisor“ at the company that has the IRA. 

Like the others have said, since an IRA is not a qualified retirement plan, a QDRO is generally not used to split the assets (IRC s 408(d)(6)). Instead, IRAs are split via a transfer incident to divorce (which is just a provision in the settlement agreement/divorce decree that directs the transfer of IRA funds or a percentage of the IRA funds to the non-owner's spouse's own IRA).  The settlement agreement should include language that shows how the assets will be divided, the method of division, the valuation date for the IRA division, how gains and losses will be divided, and who pays the fees for the division.  The specifics of what is needed may be affected by the applicable state law.

Usually, before the transfer of IRA assets is initiated, the receiving spouse needs to have an IRA account open in their name. If the receiving spouse does not have an IRA, they should open one (the easiest would be to open one with the IRA custodian where the main IRA is held).  Once the IRA is opened, the former spouse should send the divorce decree/separation agreement to the IRA custodian holding the IRA assets, indicating how the assets will be split. If the IRA custodian is satisfied with the documentation provided, the funds can then be transferred to the receiving spouse’s IRA usually within a short time period of days or weeks.  This should be able to still be done even though the receiving spouse has died.  If they have an IRA already open that would be easiest, but the executor of the estate (assuming one has been appointed, etc.) could open up an IRA.  The issue again would be whether the IRA custodian is satisfied with the documentation and the structure of the transfer.   

QDROphile is correct that IRA plans are not "qualified" under ERISA and the transfer documents are not called "QDROs".  In fact, since the prior to 2013 a court order is not even required.  See the attached article by Lawrence Gorin.  Most IRS custodians (not Plan Administrators) no longer require a Court Order and use their own forms.  Examples are attached. There may be some duplication. 

I am pretty sure that every IRA has provisions that address the possibility that the intended recipient may predecease the owner of IRA account and that no contingent beneficiary(ies) is/are named.  The provision would be called an "Order of Precedence" and might look something like this: 

 "The form applies only to the disposition of your IRA account after your death.  It is only necessary to designate a beneficiary if you want payment to be made in a way other than the following order of precedence:

To your widow or widower.
If none, to your child or children equally, and descendants of deceased children by representation.
If none, to your parents equally or to the surviving parent.
If none, to the appointed executor or administrator of your estate.
If none, to your next of kin who is entitled to your estate under the laws of the state in which you resided at the time of your death.

In this order of precedence, a child includes a natural child and an adopted child, but does not include a stepchild whom you have not adopted; parent does not include a stepparent, unless your stepparent has adopted you. By representation means that if one of your children dies before you do, that child's share will be divided equally among his or her children."

Or your state may have a similar provision in the Estates and Trust volume of the State Code. Whether or not the state law will supersede the IRA Order of Precedence is something I cannot predict.  

You are asking is a posthumous Order can be entered following the death the IRA owner.  Doubtful.  The Pension Protection Act of 2006 provides that a posthumous QDRO in an ERISA qualified plan will be valid. See 29 CFR 2530.206(c)(1) -
https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-D/part-2530/subpart-C/section-2530.206#p-2530.206(a)

I can't tell you if that applies to an IRA. 

What is the name of the IRA?  Content them and ask for their Plan Documents and whether or not they have an Order of Precedence

Her is a list of 10 cases in which "order of precedence" is used in connection with a divorce case. I don't know if they will help you. 

https://scholar.google.com/scholar?hl=en&as_sdt=4%2C36%2C111%2C126%2C356&q="order+of+precedence"+"divorce"&btnG=

If you want to expand your reseach to all case that say "order of precedence" wihtout reference to divorce you will find 35 cases at

https://scholar.google.com/scholar?hl=en&as_sdt=4%2C36%2C111%2C126%2C356&q="order+of+precedence"+&btnG=

+++IRAs_ Division and transfer in.pdf Alliance Bernstein IRA Transfer Form.pdf American Funds IRA Transfer Form.pdf Equitable Annuity IRA Transfer Form.pdf Equitable IRA Transfer Form.pdf Fidelity IRA Form.pdf Fidelity IRA.pdf Fideltiy IRA and HSA.docx Fideltiy IRA and HSA.pdf Invesco IRA Form.pdf IRA_IRRA_RothIRA_SEP_SRA_DivorceTransferForm.pdf Merrill (Lynch-Edge) IRA.pdf Merrill Lynch DivorceTransferForm 2022.pdf Morgan Stanley IRA Transfer Form.pdf MS IRA Transfer Document Blank.pdf Pacific Life.pdf Putman IRA Transfer on Divorce Form.pdf Putnam IRA.pdf RBC IRA.pdf Schwab IRA Divorce Transfer Request Form.pdf Schwab IRA Transfer in Divorce 2022 Ed.pdf Schwab IRA_ESA Divorce Transfer Request Form 2022.pdf T Rowe Price IRA DivorceTransfer Form.pdf T. Rowe Price IRA Divorce.pdf TD Americtrade IRA Transfer - Divorce.pdf TD Ameritrade.pdf TIAA IRA Letter of Instruction.doc USAA IRA form.pdf Vanguard IRA Divorce #2.pdf Wells Fargo IRA Transfer in Divorce Form.pdf

Thank you.  The IRA is with Edward Jones.  The person from Edward Jones is saying that they need a QDRO. Again, the owner of the IRA, the wife, is still living.  The divorce occurred, then the husband passed away a few weeks later before the money was moved to the husband and before a QDRO was written.  The divorce decree also stated the the ira would be divided by way of QDRO, so that needs to happen.   Just wondering Would the amount be based on the amount in the account at the time of the writing of the separation agreement, or would gains after the divorce date apply? This was not specified in the separation agreement. I was just looking for possible guidance from any similar cases. This is in the state of Ohio.

You reported, "We have brought in an additional attorney who works specifically with QDROs."

That person is in the best place to answer your questions and address what I perceive as document mistakes relating to terminology. Questions relating to Ohio domestic relations law remain.

If the representative at Edward Jones is using the word "QDRO" they don't know what they are talking about.  Talk to someone higher up in the company who understand that the acronym "QDRO" stands for QUALIFIED Domestic Relations Order" and that "QUALIFIED" meana qualified under ERISA and that IRAs are not governed by ERISA. 

The problem is that  you may not be able to get a post-mortem "Retirement Benefits Order" and may have to rely on the language of the IRA plan documents. 

We can speculate all we want, but there is the suggestion that the order that has been presented to the IRA custodian says “look for a QDRO to determine what the division of the IRA will be.” If that is so, the Edward Jones agent does not have authority or sufficient information to divide the IRA. Quite the contrary. And, something that resembles a QDRO, even though one is not necessary (or even “wrong”) can be the instrument that is effective for division of the IRA. I agree that a postmortem order could be problematic in any event, but if the existing order does not provide adequate information about the division, the IRA custodian cannot act on it.