§35.10 Plan Administration Requirements

• Jurisdiction: Washington

§ 35.10 PLAN ADMINISTRATION REQUIREMENTS

The plan administrator has the obligation to follow the statutory procedures in reviewing a QDRO.

[1] Status of the Alternate Payee

The Code and ERISA condition the assignment of plan benefits upon the alternate payee's obtaining an order that qualifies as a QDRO. However, under ERISA, the plan administrator has a duty to operate the plan solely in the interest of the plan participants and beneficiaries. 29 U.S.C. § 1104(a). Therefore, what duty, if any, is owed to a prospective alternate payee? The DOL's position is that prior to a finalized, executed order, the former spouse is merely a prospective alternate payee. DOL QDRO Pub. Q 2-1. In general, this status carries few, if any, rights. Cf. Stephen Allen Lynn P.C. Emp. Profit Sharing Plan & Tr. v. Stephen Allen Lynn P.C., 25 F.3d 280 (5th Cir. 1994). Once the order is finalized, the former spouse attains further rights, such as notification of the QDRO procedures. When the determination has been made that a QDRO exists, the alternate payee generally attains the status of a beneficiary. 29 U.S.C. § 1056(d)(3)(J). Each participant and each beneficiary in pay status has the right to receive certain information, including a summary plan description, a summary of material modifications, a statement of accrued and vested benefits, and copies of the plan. 29 U.S.C. § 1021(a).

The statutory scheme provides that the plan's QDRO procedure must be provided to the alternate payee once the order is finalized. However, at this juncture, both parties have usually been advised of the procedure. It is the Department of Labor's view that because Congress conditioned an alternate payee's rights to an assignment of a participant's benefits on the alternate payee's obtaining an order that qualifies as a QDRO, Congress intended that a prospective alternate payee have access to plan and benefit information. However, the plan administrator may condition such disclosure on being provided information sufficient to indicate that the request is being made in connection with a domestic relations proceeding. DOL QDRO Pub. Q 2-1.

[2] Plan Procedures

[a] Requirement to Adopt QDRO Procedures

The plan must adopt written procedures to determine the qualified status of an order and to administer distributions under a QDRO. The plan administrator is responsible for administering the QDRO procedure and for determining the qualified status of the order. I.R.C. § 414(p)(6)(B); 29 U.S.C. § 1056(d)(3)(G). Guidelines published by the DOL (see DOL QDRO Pub. § 2-5) further provide that the QDRO procedures should include the following:

(1) an explanation of information concerning the plan and documents that are available to assist prospective alternate payees in preparing QDROs (e.g., summary plan descriptions, plan documents, individual benefit and account statements, and any model QDRO that may have been developed for use by the plan administrator);
(2) a description of the applicable time limits for making determinations;
(3) a description of the steps the plan administrator will take to protect and preserve plan assets or benefits upon receipt

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