QDRO Legal Foundations of Domestic Relations Orders 2 — Questions and Answers
Question 1: Under ERISA, which federal law established the QDRO framework and preempts state domestic relations laws regarding pension benefits?
- The Retirement Equity Act of 1984 (Correct answer)
- The Employee Retirement Income Security Act of 1974
- The Pension Protection Act of 2006
- The Tax Reform Act of 1986
Correct answer: The Retirement Equity Act of 1984
The Retirement Equity Act of 1984 (REA) amended ERISA to create the QDRO framework, allowing state domestic relations orders to override ERISA's anti-alienation rules.
Question 2: A domestic relations order that assigns pension benefits to an alternate payee will be disqualified as a QDRO if it requires the plan to:
- Pay benefits to the alternate payee at a future date
- Provide a survivor annuity for the alternate payee
- Increase the total amount of benefits payable under the plan (Correct answer)
- Divide benefits on a percentage basis rather than a fixed dollar amount
Correct answer: Increase the total amount of benefits payable under the plan
A QDRO cannot require the plan to provide increased benefits, which would be an impermissible augmentation of plan obligations.
Question 3: Which court has authority to issue a domestic relations order that can qualify as a QDRO?
- Only federal district courts
- Only family law courts in the state where the plan is administered
- Any state court of competent jurisdiction over domestic relations matters (Correct answer)
- Only the state court that issued the original divorce decree
Correct answer: Any state court of competent jurisdiction over domestic relations matters
Any state court with competent jurisdiction over domestic relations matters — including divorce, property settlement, or support — may issue a domestic relations order.
Question 4: The 'earliest retirement age' as used in the QDRO context refers to:
- The age at which the participant first becomes vested in the plan
- The earlier of the participant's earliest possible plan retirement date or age 50 (Correct answer)
- The Social Security full retirement age applicable to the participant
- The age specified in the divorce decree for benefit commencement
Correct answer: The earlier of the participant's earliest possible plan retirement date or age 50
ERISA defines earliest retirement age as the earlier of when the participant could receive benefits or age 50, allowing alternate payees to receive benefits sooner.
Question 5: When a QDRO is submitted to a plan administrator, how long does ERISA allow for the administrator to determine whether the order is qualified?
- 18 months from the date the order is received (Correct answer)
- 60 days from the date the order is received
- 90 days from the date the order is received
- 30 days from the date the order is received
Correct answer: 18 months from the date the order is received
ERISA Section 206(d)(3)(H) provides an 18-month period during which the plan administrator must determine if the order is a QDRO.
Question 6: A QDRO that assigns rights in a defined contribution plan must identify the alternate payee's interest. Which of the following is an acceptable method of assignment?
- Assigning future employer contributions only
- Specifying a percentage of the account balance as of a specified date (Correct answer)
- Assigning unvested employer matching contributions only
- Directing all future investment gains to the alternate payee
Correct answer: Specifying a percentage of the account balance as of a specified date
Specifying a percentage or dollar amount of the account balance as of a defined date is a permissible and common method for defined contribution QDROs.
Question 7: Which of the following best describes the 'separate interest' approach in a QDRO for a defined benefit plan?
- The alternate payee receives a fixed dollar amount regardless of benefit options elected
- The alternate payee's share is carved out and managed independently, allowing them to elect their own payment options (Correct answer)
- The participant and alternate payee share all benefit elections jointly after retirement
- The alternate payee receives benefits only as a contingent survivor upon the participant's death
Correct answer: The alternate payee's share is carved out and managed independently, allowing them to elect their own payment options
Under the separate interest approach, the alternate payee's portion is segregated so they can independently elect payment options and timing, subject to plan rules.
QDRO Legal Foundations of Domestic Relations Orders 2
Under ERISA, which federal law established the QDRO framework and preempts state domestic relations laws regarding pension benefits?