QDRO Questions

By: Marvin Snyder

When the pension issue in a divorce case has been settled by agreement (or by court order) that there will be a deferred distribution using a qualified domestic relations order, the following series of questions should be answered before the pension settlement agreement is formally signed

1. Is the plan involved subject to the Employee Retirement Income Security Act (ERISA)? If not, will it accept the equivalent of a qualified domestic relations order?
2. Is all of the data available: full names, addresses, Social Security numbers and dates of birth?
3. Do you have the name and address of the employer and the formal name of the pension plan?
4. Is there a clear distinction between awarding a pension in a defined benefit pension plan and awarding an account balance in a defined contribution plan?
5. What is the cut-off date for determining the awarded benefit? Is pay and service counted after the date of marital separation or the date of the filing of the divorce complaint or the date of the divorce?
6. Is a marital coverture fraction to be used to allocate the marital portion of the benefit to be awarded?
7. If a coverture fraction is used, is the denominator based on the same time period as the time over which the benefit award is being determined?
8. Will the order allow for the alternate payee to apply under the plan for loans, hardship withdrawals, refund of contributions, if the plan so permits?
9. Will the order allow for the alternate payee to share in scheduled or ad hoc pension increases after retirement?
10. If the participant works past normal retirement age, when does the benefit start to the alternate payee?
11. If the participant retires on a disability pension, how does that affect the qualified domestic relations order?
12. If the participant applies under the plan for a loan, hardship withdrawal or refund of contributions, how does that affect the alternate payee?
13. Does the order cover the possibility that the participant may terminate employment other than by death or disability before being eligible to receive a pension?
14. What provision is made for early retirement of the participant? For the alternate payee to receive early retirement benefits whether or not the participant retires early?
15. If the plan now or in the future grants special early retirement incentives or other benefit enhancements, does the alternate payee share in the increase?
16. Have all of the contingencies been explored concerning the order of death of the participant and the alternate payee before and after retirement? Does the alternate payee's pension continue after the death of the retired participant or does it cease with his death?
17. If the plan has a cost of living increase now or in the future for pensioners, does the alternate payee's pension increase as well?
18. While the administrative processing is going on, is the beneficiary designation being kept in force to protect the potential alternate payee in the event of the death of the participant before the qualified domestic relations order is in full force and effect?

NOTE: Each case will have its own unique characteristics, and should be reviewed in detail for special situations.

No general list can cover all of the possibilities, especially in the complex field of pensions.