Section 16.33 Plans of Tax-Exempt Organizations and Church Plans

• Library: Family Law Deskbook and 2014 Supp

b. (§16.33) Plans of Tax-Exempt Organizations and Church Plans

Included within this unique group of deferred compensation arrangements are plans of certain exempt organizations, including “church plans” as defined in I.R.C. § 414(e). Under I.R.C. § 414(p)(11), a government or church plan may elect on its own to permit divisions of interests in accordance with the QDRO rules. Because these types of plans are not considered “qualified plans,” interests in these plans are generally not required to be divisible by QDROs. As a result of a labyrinth of legislative provisions, these plans (or state or local legislative body, as the case may be) can elect to treat themselves as a qualified plan for the limited purpose of permitting assignment and alienation of benefits whether by QDRO or other division mechanism similar to the QDRO. If the government or church plan elects to permit QDRO-like divisions, the plan only needs to require that the DRO create or recognize the existence of an alternate payee’s right to receive all or a portion of the benefits payable with respect to a participant under the plan. I.R.C. § 414(p)(1)(A)(i). Technically, these are not QDROs, but they may indeed take that form, and they may also be called QDROs.

The Police Retirement System of Kansas City, Missouri, is another example of a plan of a state or local government that has, on the initiative of the Retirement Board of that organization, elected to accept “qualified...