QDRO Legal Foundations of Domestic Relations Orders 3 — Questions and Answers
Question 1: A QDRO assigns 50% of a participant's accrued benefit as of the divorce date. After the divorce, the participant earns additional benefits. The alternate payee is entitled to:
- 50% of the participant's total benefit at retirement, including post-divorce accruals
- 50% of the benefit accrued only through the divorce date, excluding post-divorce accruals (Correct answer)
- The greater of 50% of the divorce-date benefit or the post-divorce accrued benefit
- 50% of the benefit accrued during the marriage only if the QDRO uses coverture fraction
Correct answer: 50% of the benefit accrued only through the divorce date, excluding post-divorce accruals
If the QDRO specifies benefits as of the divorce date, the alternate payee receives only that portion, and post-divorce accruals remain solely with the participant.
Question 2: Which of the following is NOT a required element that a QDRO must contain to be qualified under ERISA?
- The name and last known mailing address of the participant
- The name and last known mailing address of each alternate payee
- The amount or percentage of the benefit to be paid to the alternate payee
- The social security numbers of all alternate payees (Correct answer)
Correct answer: The social security numbers of all alternate payees
ERISA does not require social security numbers in a QDRO, though plans may request them for administrative purposes; the four required elements are name/address of participant, name/address of alternate payee, benefit amount/percentage, and number of payments.
Question 3: Under the 'shared payment' approach for defined benefit plans, when does the alternate payee begin receiving payments?
- At the alternate payee's 65th birthday regardless of participant status
- When the participant begins receiving retirement benefits (Correct answer)
- At the earliest retirement age defined under the plan, even if the participant has not retired
- When the domestic relations order is entered by the court
Correct answer: When the participant begins receiving retirement benefits
Under the shared payment approach, the alternate payee receives their share only when the participant actually begins receiving benefit payments.
Question 4: A plan participant dies before retirement without having elected a survivor annuity. A QDRO was previously entered. Which statement is most accurate?
- The alternate payee automatically loses all rights to benefits upon the participant's death
- If the QDRO assigned survivor annuity rights, the alternate payee may still receive benefits (Correct answer)
- The alternate payee can re-petition the court to recover lost benefits after the participant's death
- The plan is required to convert the participant's accrued benefit to a lump sum payable to the alternate payee
Correct answer: If the QDRO assigned survivor annuity rights, the alternate payee may still receive benefits
A properly drafted QDRO can assign pre-retirement survivor annuity rights to the alternate payee, protecting them even if the participant dies before retiring.
Question 5: The anti-alienation provision of ERISA generally prohibits assignment of pension benefits. The QDRO exception applies because:
- State domestic relations courts have sovereign immunity over federal pension law
- Congress explicitly created the QDRO exception in the Retirement Equity Act of 1984 to allow domestic relations assignments (Correct answer)
- The IRS granted administrative relief allowing state courts to override ERISA
- ERISA's anti-alienation provision only applies to defined contribution plans, not defined benefit plans
Correct answer: Congress explicitly created the QDRO exception in the Retirement Equity Act of 1984 to allow domestic relations assignments
Congress specifically carved out the QDRO exception to ERISA's anti-alienation rule through the Retirement Equity Act of 1984, codified at ERISA Section 206(d)(3).
Question 6: A domestic relations order requires a pension plan to pay benefits to the participant's child for child support. Can this order qualify as a QDRO?
- No, because QDROs can only be issued in connection with divorce proceedings
- Yes, because a child qualifies as an alternate payee under ERISA and child support is a recognized domestic relations matter (Correct answer)
- No, because children cannot be alternate payees under ERISA's definition
- Yes, but only if the child is over age 18 at the time the order is entered
Correct answer: Yes, because a child qualifies as an alternate payee under ERISA and child support is a recognized domestic relations matter
ERISA defines 'alternate payee' to include a spouse, former spouse, child, or other dependent, so a child receiving child support via a DRO can be an alternate payee.
Question 7: If a plan administrator determines that a domestic relations order is NOT a QDRO, what must the administrator do?
- Immediately distribute segregated amounts to the participant
- Notify the participant and each alternate payee and explain the deficiencies in writing (Correct answer)
- Return the order to the issuing court for correction without notifying the parties
- Refer the matter to the Department of Labor for adjudication
Correct answer: Notify the participant and each alternate payee and explain the deficiencies in writing
ERISA requires the plan administrator to notify the participant and each alternate payee of the determination and the specific reasons the order fails to qualify.
QDRO Legal Foundations of Domestic Relations Orders 3
A QDRO assigns 50% of a participant's accrued benefit as of the divorce date.
After the divorce, the participant earns additional benefits.
The alternate payee is entitled to: