QDRO TIPS

QDRO Tip # 2 - Supporting Documentation

The role of Supporting Documentation cannot be too heavily emphasized, and is referenced frequently in this website. A careful review of the Supporting Documentation will assist the draftsman in preparing a QDRO that is consistent with the Judgment of Dissolution of Marriage and compliant with IRC Section 414(p). Following is a description of the Supporting Documentation that should be considered.

The Marital Settlement Agreement - this document typically provides for the disposition of retirement assets as part of the overall division of marital and non-marital property. It will normally specify the percentage of benefits awarded to each spouse under a plan, but it may or may not contain directions with regard to the effective date of the assignment of benefits to the Alternate Payee, the date for commencement of benefit payments, and other optional provisions. The degree of detail provided in the Marital Settlement Agreement will control and limit the flexibility available to the QDRO drafter.

The Judgment of Dissolution of Marriage - the Judgment will either approve or incorporate the terms of the Marital Settlement Agreement if one was reached, or simply adjudicate a division of the pension assets in the absence of an Agreement.

The Plan Document - the Plan Document covering the Participant along with the latest Plan amendments is obtainable from the Plan Administrator. Often the Plan Administrator will provide the Summary Plan Description (SPD), which is a required disclosure under ERISA to participants of a retirement plan's provisions. As the name implies, however, the SPD is only a summary and may not reflect all plan amendments through the Settlement Date. The complete Plan Document with amendments should therefore be reviewed.

The Participant's Benefit Statement - the benefit statement issued nearest the Settlement Date should be obtained from the Plan Administrator. The Participant's Benefit Statement is part of the required participant disclosure information under ERISA, and is a valuable source of information. If it does not describe Early Retirement Date benefits, the Plan Administrator must be contacted for this information. The QDRO preparer should resolve with the Plan Administrator any conflicts among the Benefit Statement, the Plan Documents, and the SPD before finalizing his or her QDRO.

The Plan Sponsor's written QDRO Procedures - this document is also required under ERISA and is obtainable from the Plan Administrator. The document will describe the procedures adopted by the Plan for determining whether a domestic relations order (DRO) is a Qualified Domestic Relations Order (QDRO) under IRC Section 414(p). Often the Plan Administrator will have developed a "model QDRO" in conformity with its Procedures document. Although the Plan Administrator may not compel the use of its model QDRO, the QDRO drafter will find the model QDRO and the Procedures document useful in discussions with the Plan Administrator regarding qualification of a proposed QDRO. See Tip # 5.

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