QDROs The Division of Retirement Benefits Through ...

1 QDROs The Division of Retirement Benefits Through QualifiedDomestic Relations Orders Department of Labor Employee Benefits Security Administration This publication has been developed by the Department of Labor, Employee Benefits Security Administration. To view this and other EBSA publications, visit the agency s website. To order publications or speak with a Benefits advisor, contact EBSA electronically. Or call toll-free at: 1-866-444-3272 This material will be made available in alternative format to persons with disabilities upon request: Voice phone: (202) 693-8664 TTY: (202) 501-3911 This publication constitutes a small entity compliance guide for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

2 QDROs The Division of Retirement Benefits Through QualifiedDomestic Relations Orders Contents Chapter 1 Question 1-1: Question 1-2: Question 1-3: Question 1-4: Question 1-5: Question 1-6: Question 1-7: Question 1-8: Question 1-9: Question 1-10: Qualified Domestic Relations Orders: An Overview .. 3 What is a Qualified Domestic Relations Order? .. 4 What is a domestic relations order ? .. 4 Must a domestic relations order be issued by a state court? .. 5 Who can be an alternate payee ? .. 5 What information must a domestic relations order contain to qualify as a QDRO under ERISA?

3 6 Are there other requirements that a domestic relations order must meet to be a QDRO? .. 6 May a QDRO be part of the divorce decree or property settlement? .. 7 Must a domestic relations order be issued as part of a divorce proceeding to be a QDRO? .. 7 Will a domestic relations order fail to be a QDRO solely because of the timing of issuance? .. 8 May a QDRO provide for payment to the guardian of an alternate payee? .. 8 1 Question 1-11: Question 1-12: Question 1-13: Question 1-14: Question 1-15: Chapter 2 Question 2-1: Question 2-2: Question 2-3: Question 2-4: Question 2-5: Question 2-6: Question 2-7: Question 2-8: Can a QDRO cover more than one plan?

4 9 Must all QDROs have the same provisions? .. 9 Who determines whether an order is a QDRO? .. 9 Who is the administrator of the plan?.. 10 Will the Department of Labor issue advisory opinions on whether a domestic relations order is a QDRO? .. 11 Administration of QDROs : Determining QualifiedStatus and Paying Benefits .. 13 What information is an administrator required to provide a prospective alternate payee before the administrator receives a domestic relations order? .. 14 What are the duties of a plan administrator upon receipt of a domestic relations order by the plan?

5 15 Is a plan required to have procedures for determining whether a domestic relations order is qualified? .. 15 What requirements must a plan s QDRO procedures meet? .. 15 Are there other matters that should be addressed in a plan s QDRO procedures? .. 16 May a plan administrator charge a participant or alternate payee for determining the qualified status of a domestic relations order? .. 17 May plan administrators provide parties with a model form or forms to assist in the preparation of a QDRO? .. 17 In determining the qualified status of a domestic relations order, is the administrator required to determine the validity of the order under state domestic relations law?

6 18 Question 2-9: Is a plan administrator required to reject a domestic relations order as defective if the order fails to specify factual identifying information that is easily obtainable by the plan administrator? .. 18 Question 2-10: How long may the plan administrator take to determine whether a domestic relations order is a QDRO? .. 19 Question 2-11: What must the plan administrator do during the determination process to protect against wrongly paying Retirement Benefits to the participant that would be paid to the alternate payee if the domestic relations order had been determined to be a QDRO?

7 19 Question 2-12: What are an administrator s duties with respect to a domestic relations order received by the plan before the beginning of the 18-month period ? .. 20 Question 2-13: What are an administrator s duties with respect to a domestic relations order received on or after the date on which Benefits would be payable to an alternate payee under the order? .. 22 Question 2-14: What kind of notice is required to be provided by a plan administrator following a QDRO determination? .. 22 Question 2-15: What effect does an order that a plan administrator has determined to be a QDRO have on the administration of the plan?

8 24 Question 2-16: What disclosure rights does an alternate payee have under a QDRO? .. 24 Question 2-17: What happens to the rights created by a QDRO if the plan to which the QDRO applies is amended, merged into another plan, or is maintained by a successor employer? .. 25 Question 2-18: What happens to the rights created by a QDRO if a plan is terminated?.. 25 Question 2-19: What happens to the rights created by a QDRO if a defined benefit plan is terminated and the Pension Benefit Guaranty Corporation becomes trustee of the plans?

9 25 27 Chapter 3 Question 3-1: Question 3-2: Question 3-3: Question 3-4: Question 3-5: Question 3-6: Question 3-7: Question 3-8: Question 3-9: Question 3-10: Drafting QDROs .. What is the best way to divide a participant s Retirement Benefits in a QDRO? .. 28 How much can be given to an alternate payee Through a QDRO? .. 29 Why are the reasons for dividing the Retirement Benefits important? .. 29 In deciding how to divide the participant s Retirement Benefits , why is understanding the type of Retirement plan important? .. 32 What are survivor Benefits , and why should a QDRO take them into account?

10 33 How may the participant s Retirement benefit be divided if the Retirement plan is a defined contribution plan? .. 36 How may the participant s Retirement benefit be divided if the Retirement plan is a defined benefit plan? .. 37 May the QDRO specify the form in which the alternate payee s Benefits will be paid? .. 39 When can the alternate payee get the Benefits assigned under a QDRO? .. 40 What is earliest Retirement age, and why is it important? .. 41 Appendices Appendix A Department of Labor Interpretive Advisory Opinion 44 Advisory Opinion 48 Advisory Opinion 52 Advisory Opinion 58 Advisory Opinion 63 Advisory Opinion 67 Advisory Opinion 70 Field Assistance Bulletin 75 Appendix B ERISA Advisory Opinion 81 Appendix C IRS Sample Language for a Qualified Domestic Relations 90 Introduction More than 62 million private wage and salary workers are currently covered by employer-provided Retirement plans in the United States.