Qualified Domestic Relations Orders
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DISCLAIMER: The following information is not meant to be legal advice.
It offers alternatives, tips and resources for those with no means to
hire an attorney. The following article is only a brief explanation of
Qualified Domestic Relations Orders. For a more thorough explanation of
Qualified Domestic Orders, please review the applicable federal and state
law, and the various federal publications provided by the Internal Revenue
Service; the U.S. Department of Labor, Pension, and Welfare benefits Administration;
and the Pension Benefit Guaranty Corporation.
What is a Qualified Domestic Relations Order?
Due to federal law preemption, benefit and retirement plans that fall
under the Employee Retirement Income Security Act (ERISA) are subject
to ERISA's anti-assignment and anti-alienation provisions. Essentially,
that means that the benefits received by the participant to the ERISA
plan cannot be assigned to another person. In the context of
divorce cases in California, this is very significant. Under California law, benefit/retirement
plans may be classified as
community property. Consequently, a portion of that retirement plan may be directed ("assigned")
to the spouse or ex-spouse of the plan participant in a divorce action.
But, because federal law preempts state law, if that benefit or retirement
plan is an ERISA plan, such a division of the plan is prohibited. However,
a Qualified Domestic Relations Order, or "QDRO" is an exception
to ERISA's anti-assignment and anti-alienation provisions. A Qualified
Domestic Relations Order must relate to the provision of
child support, or marital property rights to an alternate payee. If a California court's
property division order is determined to be a Qualified Domestic Relations
Order, ERISA's anti-assignment and anti-alienation provisions will
not apply, and the court may assign a proper percentage of the plan to
the alternate payee.
What Qualified as a Qualified Domestic Relations Order?
In order for a domestic relations order to be "qualified", it
must conform to the following requirements:
1. The order must identify the following:
- a. The benefit/retirement plan or plans to which the QDRO applies;
- b. The names of the plan participant and the alternate payee; and
- c. The mailing addresses of the benefit plan participant and the alternate payee.
- 2. The alternate payee can only be a spouse, former spouse, or child/dependent
of the plan participant.
- 3. The order must specify the amount of percentage of benefits to be paid
to the alternate payee.
- 4. The order cannot require payment of benefits in excess of the actuarial
value of the participant's plan.
5. The order must do one of the following:
- a. State the length of time the payments must be directed to the alternate payee; or
- b. State the number of payments that must be directed to the alternate payee.
- 6. The order must not conflict with previous QDRO. If the benefits sought
by the QDRO are already being paid to a different alternate payee, the
more recent QDRO will not be enforceable.
- 7. The order cannot require payment in a form that is different from the
method used in the identified plan.
- 8. The order cannot require the identified plan to provide a benefit option
to the alternate payee that is not available to the plan participant.
How do I receive Qualified Domestic Relations Order?
There are a few necessary steps that must be taken in order to receive
a QDRO. First, there must be a domestic relations order. Once the party
seeking the QDRO has received a domestic relations order, he or she must
serve that domestic relations order on the plan or plans identified in
the order. At that point, the plan administrator must notify the plan
participant and the alternate payee that the plan administrator is in
receipt of the order. In addition, the plan administrator must advise
the plan participant and the alternate payee of the plan's procedures
for determining whether the domestic relations order is a QDRO. The plan
administrator must then determine whether the domestic relations order
is a QDRO within a "reasonable period of time".
If the plan administrator determines that the order is a QDRO, the plan
administrator must follow the requirements of the order. Both the plan
participant and the alternate payee have the right to appeal the plan
administrator's determination. Because the State and Federal courts
have concurrent jurisdiction over these issues, the appeal may be made
in either a California court, or a federal court.