"A participant and his spouse become divorced prior to the participant's annuity starting date under a defined benefit plan. ... [B]enefits are paid from current plan assets (instead of from annuity contracts purchased from an insurance company). The participant and his ex-spouse agreed upon a proposed division of his benefit ... However, no formal QDRO was entered by a court until 11 years after the participant's annuity
starting. Nevertheless, the participant commenced receiving reduced pension payments based upon the parties' agreed division as of his annuity starting date, in the form of a ten-year certain and life annuity. The QDRO reaffirms the division between the parties and entitles the ex-spouse to a portion of the participant's total retirement benefit (under the agreed-upon formula) retroactive to his annuity starting date.
"Based on DOL Regulations at 29 C.F.R. Section 2530.206, the timing of the entry of the QDRO does not adversely impact its qualification. In addition, the QDRO provides for payment to the ex-spouse for the participant's lifetime (since the 10-year guarantee period has expired), which is a form of payment provided under the Plan document. Moreover, case law which is controlling in the circuit in which the Plan is administered and
in which the participant and former spouse reside does not compel a different result.
"Given the eleven-year period that has elapsed since the annuity starting date, is the payment due to the spouse for the period beginning on the annuity starting date and ending on the date on which the first prospective payment begins under the QDRO, permitted to be increased by interest or some other manner of compensating the former spouse
for the delay in commencing the benefit payments to her? If the benefit had been provided under an annuity contract, I would be inclined to say no. However, since the benefit is provided from the assets of the plan's trust, I am inclined to conclude that some measure of earnings is due to the former spouse. Also, as a corollary to my question, if you agree that the spouse should be entitled to interest or earnings for the period of the
delay in commencing payments to her, how should the plan arrive at an appropriate level of interest or measure of earnings?"
