QDRO Plan Administration & Distribution Methods Flashcards

A QDRO specialist is reviewing a state pension plan QDRO. Unlike private-sector plans, state and local government plans are governed by which law rather than ERISA?

Answer: State domestic relations law and state pension statutes

State and local government plans are exempt from ERISA and are instead governed by applicable state law, which typically has its own domestic relations order (DRO) requirements.

For a military retirement QDRO under the Uniformed Services Former Spouses Protection Act (USFSPA), the maximum percentage of disposable retired pay that can be directly paid to a former spouse by the Defense Finance and Accounting Service (DFAS) is:

Answer: 50%

DFAS will directly pay a former spouse up to 50% of the member's disposable retired pay under a qualifying court order pursuant to the USFSPA.

Under a defined benefit plan QDRO using the separate interest approach, the plan must offer the alternate payee which optional form of benefit that is available to the participant?

Answer: All optional forms available to the participant as of the assignment date

A separate interest QDRO must preserve for the alternate payee all optional forms of benefit that were available to the participant at the time of the QDRO assignment.

When a plan administrator receives a domestic relations order, the interim period during which benefit payments must be held or segregated while the order is being reviewed is typically:

Answer: 18 months

ERISA requires plan administrators to segregate the amounts that would be payable under a potential QDRO for up to 18 months while determining whether the order is qualified.

In a cash balance plan, the participant's benefit is expressed as a hypothetical account balance. A QDRO dividing a cash balance plan most commonly assigns the alternate payee:

Answer: A percentage or dollar amount of the participant's hypothetical account balance

Because cash balance plans track benefits as account balances, QDROs typically assign the alternate payee a specific percentage or dollar amount of the participant's hypothetical account balance.

When a QDRO is entered after the participant has already retired and is receiving pension payments, the plan administrator generally must:

Answer: Begin paying the alternate payee their share from the next regular payment cycle after qualification

Once a QDRO is qualified, the plan administrator begins directing the alternate payee's assigned share from the next scheduled payment, with no requirement to recalculate past payments absent specific order language.