Qualified Retirement Benefits

• Author: Brian C. Vertz and Mitchell E. Benson
• Pages: 287-330

QUALIFIED

RETIREMENT

BENEFITS

13-1

CHAPTER 13

QUALIFIED RETIREMENT BENEFITS

§13. QUALIFIED RETIREMENT BENEFITS

§13.1 GENERAL BACKGROUND

§13.2 ANTIALIENATION PROVISIONS OF ERISA

§13.3 RETIREMENT EQUITY ACT, PURPOSE

§13.4 FAILURE TO INCLUDE RETIREMENT BENEFITS IN DISTRIBUTION

§13.5 DEFINITIONS

§13.5.1 Alternate Payee

§13.5.2 Annulments, Applicability

§13.5.3 Benef‌iciary

§13.5.4 Contributory Plan

§13.5.5 Def‌ined Benef‌it Plan

§13.5.6 Def‌ined Contribution Plan

§13.5.7 Domestic Relations Order

§13.5.8 Earliest Retirement Age

§13.5.9 Form of Payment

§13.5.10 Non-Contributory

§13.5.11 Non-Qualif‌ied Plans

§13.5.12 Participant

§13.5.13 Pay Status

§13.5.14 Plan Administrator

§13.5.15 Qualif‌ied Domestic Relations Order

§13.5.16 Qualif‌ied Plans

§13.5.17 Surviving Spouse

§13.5.18 Survivor Benef‌it

§13.5.19 Vested Benef‌it

§13.5.19.1 Graduated Vesting

§13.5.19.2 “Clif f” Vesting

§13.5.19.3 Accrued Benef‌it

§13.6 QUALIFIED DOMESTIC RELATIONS ORDERS (QDROS)

§13.6.1 I.R.C. §414(p)

§13.6.2 Rules for QDROs

§13.6.2.1 Summary of QDRO Requirements

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BENEFITS

Divorce Taxation 13-2

§13.6.2.2 Benef‌its, Amounts or Percentage Must Be Stated

§13.6.2.2.1 When a QDRO Can Be Entered

§13.6.2.3 Fixed Amount of Payment

§13.6.2.4 Percentage of Benef‌its

§13.6.2.5 Inclusion of a Formula

§13.6.2.6 Early Distribution Option

§13.6.2.7 Benef‌its: As Provided Under Plan and Limited to Participant’s Benef‌its

§13.6.2.8 Number of and Period for Payments

§13.6.2.9 Plan to Which the Order Applies

§13.6.2.10 Participant and Alternate Payee Identif‌ied

§13.6.2.11 Priorit y of Prior QDROs

§13.7 PAYMENT OF BENEFITS TO ALTERNATE PAYEE

§13.7.1 Earliest Date of Payments

§13.7.1.1 Def‌inition of “Earliest Retirement Age”

§13.7.1.2 Examples

§13.7.2 Special Provisions in Plan

§13.7.3 Latest Date of Payment of Benef‌its

§13.7.4 Death, Disability or Separation from Service of Employee Spouse

§13.7.4.1 Special Rules Upon Death of Participant

§13.7.5 Other Plan Eligibility Requirements

§13.7.6 Complexities of Def‌ined Benef‌it Plans

§13.8 SURVIVING SPOUSE DESIGNATIONS

§13.8.1 Form of Benef‌it

§13.8.1.1 Post-Starting Date of Payments; Qualif‌ied Joint and Survivor Annuity (QJSA)

§13.8.1.2 Pre-Retirement; Qualif‌ied Pre-Retirement Survivor Annuity (QPSA)

§13.8.1.3 Consent to Waiver

§13.8.1.4 Marriage of Less Than One Year Duration

§13.8.1.5 Waiver by “Spouse” of Survivorship Benef‌its

§13.8.1.5.1 Premarital Agreement, Ineffective as

Waiver of Benef‌its in a Qualif‌ied Plan

§13.8.1.5.2 Premarital Agreement, Waiver of Equitable

Distribution Rights in Qualif‌ied Plans

§13.8.1.6 Waiver by Spouse of Benef‌its in Qualif‌ied Plans

§13.8.1.7 Cut-Off Date for Change

§13.8.2 Death of Alternate Payee

§13.9 PROCEDURAL RULES

§13.9.1 Steps to Take

§13.9.2 Compliance with State Law

§13.9.3 Disputes with Plan Administrator

§13.9.4 Fees for Plan Administrator

§13.10 ALIMONY AND CHILD SUPPORT, USE OF QDRO

§13.10.1 Security for Future Payments

§13.10.2 Arrearages, Attorneys’ Fees, Temporary Support and Taxes Thereon

§13.10.2.1 Temporary Relief

§13.10.2.2 Use of QDRO for Alimony in Arrears 20 Years After Judgment from Another State

§13.10.2.3 QDRO Entered in Same State to Collect Alimony

in Arrears Nine Years Subsequent to Divorce

§13.10.2.4 Use of Subsequent QDRO to Collect Delinquent Alimony and Child Support

Held to Be Permissible Modif‌ication of Prior Judgment

§13.10.2.5 Use of QDRO to Collect Required Payment for Equitable Distribution of Property

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13-3 Qualif‌ied Retirement Benef‌its

§13.10.2.6 Minority Holding That Subsequent QDRO Constitutes Impermissible

Modif‌ication, Notwithstanding for Collection of Arrearage in Spousal Support

§13.10.2.7 Tax Consideration When Using QDRO for Collection of Arrears

§13.11 FORM FOR COURT TO RESERVE JURISDICTION

§13.11.1 Time Within Which QDRO May Be Entered

§13.12 QUALIFIED DOMESTIC RELATIONS ORDER CHECKLIST

§13.12.1 QDRO Drafting—Company Plan and Forms

§13.13 JOINDER OF THE PLAN, TRUST AND PLAN ADMINISTRATOR

AS THIRDPARTY DEFENDANTS UNDER STATE LAW

§13.13.1 Attorneys’ Fees Cannot Be Awarded Out Of or Against the Plan

§13.14 TAXATION OF PAYMENTS OF RETIREMENT FUNDS

§13.14.1 Payments From Plan Without QDRO

§13.14.2 Taxation as Annuity

§13.14.3 Taxation of Lump Sum Distribution

§13.14.4 “Roll-Over” Alternative

§13.14.5 Loans From Plan

§13.14.6 Ten Percent Early Distribution Penalty

§13.14.6.1 Separation From Service

§13.14.6.2 Equal Payments

§13.14.6.3 Disability

§13.14.6.4 Alternate Payee Payments

§13.14.6.5 Medical Expenses

§13.14.7 [Reserved]

§13.14.8 Taxation Payments Received by Alternate Payee

§13.14.8.1 Lump Sum Payments

§13.14.8.2 Ten Percent Early Withdrawal Penalty by Alternate Payee

§13.14.9 Distribution for Child Support

§13.14.10 Twenty Percent Withholding on Distributions From Qualif‌ied Plans

§13.14.11 Exempt From Withholding Requirements

§13.14.12 Rollovers

§13.14.13 Required Minimum Distributions

§13.15 TOP TEN QDRO MISTAKES EXPERIENCED LAWYERS MAKE

§13.15.1 Misunderstanding the Type of Plan to Be Divided

§13.15.2 Attempting to Divide Non-Divisible Plans

§13.15.3 Failing to Use the Correct Name of the Plan

§13.15.4 Failing to Set a Clear Date of Division

§13.15.5 Failing to Address Earnings and Losses, and Tax Allocation

§13.15.6 Failing to Address Surviving Spouse Issues

§13.15.7 Messing Up the “Equalization” of Multiple Plans

§13.15.8 Ignoring Loan Balances

§13.15.9 Failing to Indicate Who Is Responsible for Drafting the QDRO

§13.15.10 Failing to Implement the QDRO

§13.16 FIVE NEW QDRO MISTAKES THAT EXPERIENCED LAWYERS MAKE