QDRO paying 100% to AP

A couple of questions that I probably know the answers to, but thought I run them past other experts:

1) Has anyone seen a QDRO that assigns 100% of the participant's accunt balance (401(k)/ps plan) to the alternate payee? 

2) I am an attorney who limits my practice to drafting QDROs for divorce attorneys. I always request a copy of the Judgment of Divorce or at least the section containing the retirement plan division. I have been retained to draft a QDRO that provides for a different division than the Judgment of Divorce provides for. I told the attorney the Judgment needs to be amended to comply with the QDRO. He refuses, saying amendment is not necessary, and that I should just draft the QDRO as told. I believe that the Judgment must be amended to agree with the QDRO, and told him so. Am I being unreasonable?

Addressing only the first question:  I know of no rules that would prevent assignment of more than 50% to the alternate payee.  As a QDRO cannot increase the plan's liability, it would seem that 100% of the account balance to the alternate payee is the absolute limit for a QDRO.  Perhaps the participant is keeping the $250,000 house, and the divorce agreement may (among other things) give the $30,000 car, 100% of the 401(k) balance, and other assets to the alternate payee to reach an equitable distribution of the joint assets.  Presuming that both sides agree to the distribution of assets, it is not for the plan administrator to worry about the QDRO giving most or all of the plan balance to the alternate payee.

Concerning the second, and not being an attorney, I would be a bit leery of a request to provide such a draft QDRO, especially if I did not know for sure that it was consciously agreed to by both sides.  Wouldn't want to aid one side in defrauding the other!  Would you still get paid if you sent the draft to both parties, pointing out the change in the cover letter?

59 minutes ago, My 2 cents said:

Addressing only the first question:  I know of no rules that would prevent assignment of more than 50% to the alternate payee.  As a QDRO cannot increase the plan's liability, it would seem that 100% of the account balance to the alternate payee is the absolute limit for a QDRO.  Perhaps the participant is keeping the $250,000 house, and the divorce agreement may (among other things) give the $30,000 car, 100% of the 401(k) balance, and other assets to the alternate payee to reach an equitable distribution of the joint assets.  Presuming that both sides agree to the distribution of assets, it is not for the plan administrator to worry about the QDRO giving most or all of the plan balance to the alternate payee.

 

I agree it can be up to 100% and the example given was my parents in reverse.

My father had a solid income to get a mortgage but feared he was too old to rebuild his retirement savings if it too a large hit.  My mom had low income and needed to know she would have a roof over her head.  So she agreed to take none of my father's retirement funds and she got a house that had almost no debt on it. 

As long as all parties knowingly agree to the way it is divided there are no rules saying how the Qualified Plan balances have to be split.

I can't remember a 100% QDRO but I know I have seen some that were around 75%.  I even saw one once that not only defined the amount but which assets were to be paid to the Alt Payee.  It was a Dr plan and he had crazy assets in his plan.  The wife wanted nothing to do with the diamonds and other alternative assets in the plan.  She wanted cold hard cash and the QDRO said she was to be in cash only no in kind payments. 

Also not an attorney but I don't see how a QDRO and divorce decree can't sync. 

2.  I wonder who is your client: one attorney? both sides?  I agree that drafting a DRO contrary to the plain reading of supporting documents is not good practice.  I foresee a scenario where you draft as instructed, the other party objects, and they tweak your draft, and refuse to pay you.

When QDROs first came on the scene, I had a plan with a participant who's QDRO was based on a court order. This court order held that the ex-spouse was due 50% of the account balance as of a particular date and the children of the marriage were due the other 50%. So I have seen it happen.

For item 2, I would think any difference between the QDRO and the Judgment for Divorce  would be another lawsuit waiting to happen.

1)  Yes, I have seen it a few times.  Not an issue as long as that was what was agreed upon.

I once saw one where (ex)husbands QDRO assigned 100% to the (ex) wife and vice versa.  I found out years later from the client that they never separated after they got divorced, and she believed they were in financial trouble and QDROs were the only way they could access their respective retirement plans. 

2) Is your involvement limited to drafting the DRO for the other attorney who will then submit it to the court?  If that is the case, you are simply providing the product as requested.  Request payment in advance and make sure that your concerns are duly noted.