Plan Termed, Partic is getting a divorce

Plan is termed a/o 9/30.  In process of paying out accounts.  Hope to get this done by 12/31 for obvious reasons.

Tracking down former employees, get in touch with one of them.

She tells me she is getting a divorce.  Normally, flag goes up, put hold on account and wait for DRO.

Is that the same thing here?

Can a divorce hold up a plan termination?  Or, at least, hold it up for this one person?

Interesting question, and I'll be eager to hear what the ERISA attorneys on these boards say. IMHO, it is not reasonable for a divorce situation to hold up a plan termination, but I don't know how this is resolved. Seems odd that I've never yet seen this situation, but I haven't.

Unless the plan has bad QDRO procedures or bad advisers, the plan is blind to a divorce and needs to take no action out of the ordinary, including proceeding with distributions on termination, until the plan receives a domestic relations order. Finish the distribution and keep quiet and lay low. Don’t seek trouble. Don’t believe the DOL QDRO book.

Generally, I agree with above comments.  However, it's not prudent to simply ignore it.  Rather, write down what you are doing, including nothing, and cite your QDRO procedures.  Remember, being informed of a divorce or potential divorce might be a "red flag" (i.e., you might be expecting to receive a DRO) but is not the trigger for "put hold on account".  It is not the same thing as receiving a DRO.  See IRC 414(p)(7).

The plan must follow its QDRO procedures and plan terms even if ill-informed and set standards beyond what the statute requires.

If a QDRO procedure calls for a “hold” sooner than ERISA § 206(d)(3)(H) otherwise would require it, does anything preclude amending the procedure so it calls for no more than ERISA § 206(d)(3)(G)-(H) requires?

Does it matter if that "hold" has been triggered under the terms of the QDRO procedures (or plan terms, although not likely to be added there) before the action to amend has been taken?

Assuming an otherwise valid amendment of the QDRO procedure, I doubt that ERISA § 402 provides a non-participant, even less one who is not yet a proposed alternate payee, a vested right in the administrator not changing its procedure.

I don't quite get your point about section 402, but I do remember that the discussion in first-year contracts class about unilateral contracts was unsettling.  Pursuing that line would not be helpful in this forum.

For a plan not ERISA-governed, I might consider a State’s statutory and common law of contracts.  (For a governmental plan, I’d consider interpretations of the U.S. and State constitutions.)

But with limited exceptions that don’t relate to a plan’s terms, ERISA preempts a State law that “relates to” an ERISA-governed employee-benefit plan.  ERISA § 514.

I look to ERISA § 402 because it presumes an employee-benefit plan was expressed in writing, and that a written plan “provide a procedure for amending [the] plan[.]”  ERISA § 402(b)(3).

If a QDRO procedure is stated in the plan’s governing document, one would follow whatever that document calls for to make a proper amendment.

If a QDRO procedure is stated by a distinct document, one might see to it that an amendment of the QDRO-procedure document is made by the person that was, following ERISA § 402, properly granted authority to make or amend a document of that kind, and, if that person is an artificial person, by a human with authority to act for the artificial person.

Except for a participant’s interest in something that ERISA or a plan’s governing document makes non-forfeitable or accrued and not to be cut back, I don’t see anything in ERISA that precludes a change because a non-participant has an expectation.

For a plan not ERISA-governed, I might consider a State’s statutory and common law of contracts.  (For a governmental plan, I’d consider interpretations of the U.S. and State constitutions.)

But with limited exceptions that don’t relate to a plan’s terms, ERISA preempts a State law that “relates to” an ERISA-governed employee-benefit plan.  ERISA § 514.

I look to ERISA § 402 because it presumes an employee-benefit plan was expressed in writing, and that a written plan “provide a procedure for amending [the] plan[.]”  ERISA § 402(b)(3).

If a QDRO procedure is stated in the plan’s governing document, one would follow whatever that document calls for to make a proper amendment.

If a QDRO procedure is stated by a distinct document, one might see to it that an amendment of the QDRO-procedure document is made by the person that was, following ERISA § 402, properly granted authority to make or amend a document of that kind, and, if that person is an artificial person, by a human with authority to act for the artificial person.

Except for a participant’s interest in something that ERISA or a plan’s governing document makes non-forfeitable or accrued and not to be cut back, I don’t see anything in ERISA that precludes a change because a non-participant has an expectation.

I look to ERISA § 402 because it presumes an employee-benefit plan was expressed in writing, and that a written plan “provide a procedure for amending [the] plan[.]”  ERISA § 402(b)(3).

If a QDRO procedure is stated in the plan’s governing document, one would follow whatever that document calls for to make a proper amendment.

If a QDRO procedure is stated by a distinct document, one might see to it that an amendment of the QDRO-procedure document is made by the person that was, following ERISA § 402, properly granted authority to make or amend a document of that kind, and, if that person is an artificial person, by a human with authority to act for the artificial person.

Except for a participant’s interest in something that ERISA or a plan’s governing document makes non-forfeitable or accrued and not to be cut back, I don’t see anything in ERISA that precludes a change because a non-participant has an expectation.

I don't know why the software crosses out a normal text.

Peter, none of your text is ever “normal “.  I mean that in a good way.

Notwithstanding my respect for your position, which has great merit, I think amending unfortunately drafted QDRO procedures (“hold” on notice of domestic relations proceeding - not a DRO) after the notice is going to be messy if the would-be alternate payee chooses to fight (because the law is not as solid as you imply or state, especially with messy facts and an incorrect DOL position). What saves a lot of bad QDRO advice/documentation/administration is that the stakes are not high enough, or the players are not rich enough to fund the fight.  At a minimum, the dispute, including following claims procedures and possibly court appeal or DOL intervention will involve a lot of delay, which is troublesome for a terminating plan. So, the better approach is: 1) not to have bad QQDRO procedures and practices, and 2) don’t go looking for trouble in a misguided attempt to protect the innocent.

QDROphile opens our eyes to some points this discussion had not considered.

It’s better that an ERISA-governed plan’s QDRO procedure does not unnecessarily call for a “hold” ERISA doesn’t require.  (I’ve held that view since 1984.)

Changing a procedure a divorcing spouse expected or, worse, might have relied on is troublesome.  Among other ways, it could result in lawyering or litigation expense.  And it risks that a court might render an incorrect decision.  (Some of the nonsense PWBA/EBSA published heightens those risks.)

Even if I’m right about how a Federal court should apply the statute (and should ignore unpersuasive subregulatory interpretations and other courts’ incorrectly reasoned decisions), it’s smart to consider that judges don’t always get everything right.

For the situation BG5150 describes, changing an unfortunate QDRO procedure, despite risks, would be about affording a terminated plan’s administrator a choice to act so a “hold” anticipating a domestic-relations order doesn’t delay a distribution that completes a plan’s termination.

A risk that someone challenges a change in a QDRO procedure might be moderate because, as QDROphile describes, would-be plaintiffs make choices about whether to challenge a plan administrator’s act or decision.

I don’t know the facts and circumstances of the plan BG5150 describes, and shouldn’t guess which is the worse set of expenses and risks.