The Complete Qdro Handbook: Dividing Erisa, Military, And Civil Service Pensions And Collecting Child Support From Employee Benefit Plans

by Carrad, David Clayton

• ISBN13: 9781590313787
• ISBN10: 159031378X
• Edition: 2nd
• Format: Paperback
• Copyright: 2005-06-01
• Publisher: Natl Book Network

Summary

Written for family lawyers, judges, and plan administrators, this is a comprehensive resource for effectively handling QDROs and working with all of the parties involved.

Table of Contents

About the Author	xxi
Introduction	xxiii
Employee Benefit Plans and Family Support Obligations	1	(10)
Pensions Before Employee Retirement Income Security Act (ERISA)	1	(1)
1974: ERISA Changes the Rules	2	(1)
The Anti-Alienation Clause of ERISA vs. State Divorce Law Developments	2	(1)
Federal and State Case-Law Development, 1974--84	3	(1)
1984: The Retirement Equity Act (REA) Changes the Rules Again	3	(1)
Case-Law and Regulatory Development, 1984--2000	4	(1)
Non-ERISA Plans: Military, Federal, State, and Local Government Retirement Plans	5	(1)
Why Are QDROs So Important?	5	(1)
Why Are QDROs So Difficult?	6	(1)
The Top Ten QDRO Mistakes and How to Avoid Them	7	(2)
Common Interests and Goals	9	(2)
``Just Enough ERISA'': Core Definitions and Principles	11	(18)
Introduction	11	(1)
Key ERISA Definitions	12	(8)
Employee Benefit Plan	12	(1)
Employee Pension Benefit Plan	12	(1)
Employee Welfare Benefit Plan	12	(1)
Participant	13	(1)
Beneficiary	13	(1)
Plan Administrator	13	(1)
Plan Sponsor	14	(1)
Normal Retirement Age	14	(1)
Earliest Retirement Age	14	(1)
Defined Contribution Plan or Individual Account Plan	15	(1)
Defined Benefit Plan	16	(1)
Hybrid Plan	17	(1)
Alternate Payee	17	(1)
Domestic Relations Order (DRO)	18	(1)
Qualified Domestic Relations Order	18	(2)
Actuarial Value	20	(1)
Written QDRO Procedures	20	(1)
Representative	20	(1)
Key ERISA Concepts	20	(9)
Plan as Separate Legal Entity	20	(1)
Vested Pensions	21	(1)
Matured Pensions	21	(1)
Pensions In Pay Status	21	(1)
Fiduciary Duties	21	(1)
Plan's Duties upon Receipt of a DRO	22	(1)
First Duty: Notify the Parties of Receipt of DRO and Determine Qualified Status within a Reasonable Time	22	(1)
Second Duty: Escrow of Amount Payable to Alternate Payee While Determination Is Pending	23	(1)
Protection of Spouses and Former Spouses	24	(1)
ERISA Pre-Emption of State Law	25	(1)
Qualified Plan	26	(1)
QDRO Litigation	26	(3)
Essential Information and How to Get It	29	(14)
Introduction	29	(2)
The Three Key Plan Documents	31	(7)
The Summary Plan Description	32	(1)
The Annual Benefits Statement	33	(1)
The Plan's Written QDRO Procedures	34	(4)
How Do You Obtain These Key Documents?	38	(5)
When You Represent the Participant	38	(1)
When You Represent the Alternate Payee	39	(4)
Interim Relief	43	(6)
Introduction	43	(1)
Immediate Steps	44	(2)
Informal Request	44	(1)
Interim DRO	45	(1)
State Law Remedies	45	(1)
Benefits Already In Pay Status	46	(1)
Investment Decisions	46	(1)
If Your Application for Interim Relief Fails	47	(2)
Inclusion and Valuation	49	(12)
Introduction	49	(1)
Inclusion Dates	49	(2)
Post-Divorce Events	51	(6)
Post-Divorce Allocation of Interest, Dividends, and Capital Gains and Losses to Alternate Payee's Share	51	(1)
Post-Divorce Contribution Dates and Proration	52	(1)
Vesting	53	(3)
Forfeitures	56	(1)
Valuation Dates	57	(1)
Offset Method of Dividing Pensions	58	(1)
Alimony and Child Support	59	(2)
How to Divide Deferred Payment Annuities	61	(18)
Introduction	61	(1)
Definitions and Examples	62	(9)
Annuity	62	(1)
Single Life Annuity	62	(1)
Joint and Survivor Annuity	62	(1)
Qualified Joint and Survivor Annuity (Q JSA)	62	(1)
Pre-Retirement Survivor Annuity	63	(1)
Qualified Pre-Retirement Survivor Annuity (QPSA)	63	(1)
Fixed Term Annuity	64	(1)
Hybrid Annuity	65	(1)
Actuary	65	(1)
Actuarial Value	65	(1)
Present Actuarial Value	66	(2)
Employer Subsidy for Early Retirement	68	(2)
Shared Interest Approach	70	(1)
Separate Interest Approach	70	(1)
Accrued Benefit	71	(1)
Survivor Benefit Plan	71	(1)
Former Spouse Survivor Annuity	71	(1)
Alternative Approaches to Dividing Annuities	71	(4)
Pension Already In Pay Status	72	(1)
Shared Interest Approach: Single Life Annuity on Life of Participant	73	(1)
Shared Interest Approach: Qualified Joint and Survivor Annuity on Lives of Participant and Alternate Payee	73	(1)
Shared Interest Approach: Qualified Joint and Survivor Annuity on Lives of Participant and New Spouse (Other Than Alternate Payee)	73	(1)
Separate Interest Approach: Single Life Annuity on Life of Alternate Payee	74	(1)
Which Alternative Is Best for Your Client?	75	(4)
Assessing Your Client's Needs and Wishes; Formulating a Strategy	79	(8)
Introduction	79	(1)
What Are the Realistic Alternatives?	80	(2)
Other Assets	80	(1)
Need for Valuation	81	(1)
Defined Contribution Plans	81	(1)
Defined Benefit Plans	81	(1)
Terms of the Plan	81	(1)
Tax Consequences	82	(1)
What If a QDRO Is Not Available?	82	(1)
What Factors Should Be Considered?	82	(2)
Which Alternative Should Your Client Pursue?	84	(1)
QDROs for Child Support and Alimony	85	(1)
Representing the Participant	86	(1)
Avoiding Malpractice Claims	86	(1)
Drafting the DRO	87	(54)
Introduction	87	(1)
Who Will Draft the DRO?	87	(2)
Preliminary Considerations	89	(12)
Prepare Separate DROs for Each Plan	89	(1)
Prepare the DRO as Soon as Possible	89	(1)
Pre-Qualify the DRO with the Plan	90	(1)
The ``Dirty Dozen'': Twelve Good Reasons Why Your Clients (and Your Malpractice Insurance Carrier) Don't Want You to Just Fill in the Blanks in the Plan's Model Order	90	(11)
QDROs Don't Have to Be Complex	101	(1)
Model DRO with Alternative Clauses	102	(35)
Parties	103	(1)
Domestic Relations Law	103	(1)
Relationship of Alternate Payee to Participant	104	(1)
Identity of Plan	105	(1)
Division of Payments	105	(1)
Part A: Division of a Defined Benefit Plan Already In Pay Status	106	(3)
Part B: Division of a Defined Benefit Plan Not Yet In Pay Status	109	(1)
Sub-Part I. Shared Interest Approach	110	(1)
Sub-Part II. Separate Interest Approach	111	(7)
Part C: Division of a Defined Contribution Plan	118	(5)
Duration of Payments	123	(3)
Survivor Benefits for Alternate Payee	126	(4)
Contingent Alternate Payees; Recomputation of Participant's Plan Benefits	130	(2)
Participant Not to Interfere with Alternate Payee's Rights	132	(1)
Pension Benefit Guaranty Corporation Takeover	132	(1)
Effect of Order	133	(1)
Representative for Alternate Payee	133	(1)
Tax Effect	134	(2)
Reservation of Jurisdiction	136	(1)
Final Quality Control Check	137	(1)
DRO Checklist	138	(3)
From DRO to QDRO	141	(4)
Get the Judge to Sign the DRO	141	(1)
Send the DRO to the Plan as Soon as Possible	141	(1)
Follow Up, Follow Up, Follow Up!	142	(1)
Rewrite the DRO as Necessary	142	(1)
Get the Qualification Decision in Writing	143	(1)
Review Old QDROs Every Three to Five Years	144	(1)
When You Reach an Impasse	144	(1)
QDRO Litigation	145	(18)
Litigation Against the Plan	145	(12)
Concurrent Jurisdiction	146	(1)
Federal Venue Provisions	147	(1)
State Jurisdiction and Venue	147	(1)
Removal to Federal Court	147	(1)
Remand to State Court	148	(1)
Remand to Plan Administrator	149	(1)
Federal Court Qualifies Order	149	(1)
State Court Qualifies Order	149	(1)
Plan as Party to Divorce Action	150	(1)
Failure to Follow Plan's Own QDRO Procedures	151	(1)
Attorneys' Fees	151	(2)
Sanctions for Failure to Provide Information	153	(1)
Standard of Review of Plan Administrator's Decision	153	(1)
Appointment of Alternate Payee as Plan Administrator	154	(1)
Application to Qualify DRO after Death of Participant	154	(2)
QDROs for Employee Welfare Benefit Plans	156	(1)
Named Beneficiary in Plan File	156	(1)
Bankruptcy	157	(1)
Tax Litigation with IRS	158	(2)
Malpractice	160	(3)
Military Retired Pay	163	(24)
Background	163	(1)
``Disposable Retired Pay''	164	(2)
Timing of Payments	166	(1)
Divisibility of Disposable Retired Pay as Property by State Courts	167	(1)
State Law Division Factors	167	(1)
Direct Payment for Property Division to Former Spouse	168	(1)
Direct Payment for Child Support and Alimony Orders	169	(1)
State Court Jurisdiction	169	(2)
Procedure for Obtaining for Direct Payment	171	(3)
Survivor Benefit Plan	174	(1)
Medical Coverage	175	(1)
Discovery	176	(1)
Model Order Dividing Military Retired Pay	176	(7)
Parties	177	(1)
Jurisdiction	177	(1)
Soldiers' and Sailors' Civil Relief Act	177	(1)
Relationship of Former Spouse to Service Member	177	(1)
Amount of Payments	178	(2)
Duration of Payments	180	(1)
Survivor Benefit Plan	180	(1)
Service Member Not to Interfere with Former Spouse's Rights	180	(1)
Recomputation of Service Member's Benefits	181	(1)
Tax Effect	181	(1)
Reservation of Jurisdiction	182	(1)
DD Form 2293	183	(1)
Checklist for Order Dividing Military Retirement Pay as Property	184	(1)
Thrift Savings Plan	185	(2)
Federal Civil Service Pension Plans	187	(30)
Federal Pension Plans	187	(3)
Employee Annuities	189	(1)
Self-Only Annuity	189	(1)
Gross Annuity	189	(1)
Net Annuity	190	(1)
Refunds of Employee Contributions	190	(1)
Former Spouse Survivor Annuity	190	(1)
Common Features	190	(4)
OPM Responsibilities	191	(1)
State Court Responsibilities	191	(1)
Former Spouses' Responsibilities	191	(1)
Employees' and Retirees' Responsibilities	191	(1)
Application for a COAP	192	(1)
OPM Notice Procedures	192	(1)
Notice to Former Spouse	192	(1)
Notice to Employee, Former Employee, or Retiree	193	(1)
Contesting Validity of COAP	193	(1)
Conflicting COAPs	193	(1)
Division of Employee Annuity	194	(3)
Forbidden and Required Language	194	(1)
Express Division	194	(1)
Direct Payment	195	(1)
Computation of Amount	195	(1)
COLAs	195	(1)
Pro-Rata Share	196	(1)
Forbidden References	196	(1)
Level of Annuity to Which Formula, Fraction, or Percentage Is Applied	196	(1)
Payments after Death of Employee Forbidden	196	(1)
Payments after Death of Former Spouse Allowed	197	(1)
Division of Refunds of Employee Contributions	197	(1)
Separation from Service and Entitlement	197	(1)
Time of Application	197	(1)
Required and Forbidden Language and References	197	(1)
Order Barring Payment of Refunds	198	(1)
Provision of a Former Spouse Survivor Annuity	198	(5)
Remarriage	198	(1)
Required and Forbidden Language	199	(1)
Express Award of Former Spouse Survivor Annuity	199	(1)
Specification of Type of Survivor Annuity	199	(1)
Computation of Formulas	200	(1)
Time of Order	200	(1)
Cost of FSSA Must Be Paid by Annuity Reduction	200	(1)
Amount	201	(1)
Pro-Rata Share	201	(1)
Automatic COLA	201	(1)
Temporary Annuity Order	202	(1)
Election and Disclaimer	202	(1)
Special Notice Requirements	202	(1)
Discovery	203	(1)
Model COAP	203	(8)
Parties	204	(1)
Identity of Plan	204	(1)
Part A: Division of Employee Annuity	204	(1)
Division of Employee Annuity	204	(1)
Duration of Payments	205	(1)
Cost of Living Adjustments	205	(1)
Payment after Former Spouse's Death	205	(1)
Part B: Division of Refund of Employee Contributions	206	(1)
Division of Refund of Employee Contributions	206	(1)
Part C: Provision of Former Spouse Survivor Annuity	206	(1)
Provision of Former Spouse Survivor Annuity	206	(1)
Amount	207	(1)
Cost to Be Paid by Annuity Reduction	208	(1)
Cost of Living Adjustments	208	(1)
Part D: General Provisions	208	(1)
Recomputation of Employee's Benefits	208	(1)
Employee Not to Interfere with Former Spouse's Rights	209	(1)
Tax Effect	209	(1)
Reservation of Jurisdiction	210	(1)
Checklist for COAP	211	(1)
Thrift Savings Plan	212	(1)
Railroad Retirement Act Pensions	213	(2)
Other Federal Plans	215	(2)
Miscellaneous Plans: IRAs, Nonqualified Plans, State and Local Pension Plans, and QMCSOs	217	(10)
IRAs	217	(2)
Nonqualified Plans	219	(1)
State and Local Government Pension Plans	220	(1)
Qualified Medical Child Support Orders	221	(2)
Model QMCSO	223	(4)
Parties	223	(1)
Domestic Relations Law	224	(1)
Relationship of Alternate Recipient to Participant	224	(1)
Identity of Plan	224	(1)
Coverage	224	(1)
Duration of Coverage	224	(1)
Effect of Order	225	(1)
Role of IV-D Agency	225	(1)
Participant Not to Interfere with Alternate Recipient's Rights	225	(1)
Reservation of Jurisdiction	225	(2)
QDROs: From Headache to Profit Center for Your Law Practice	227	(8)
Introduction	227	(1)
Know the Law	228	(1)
Make Sure Your Clients Participate in All QDRO Decisions	228	(1)
Keep Your Clients Informed	229	(1)
Draft the DRO as Early as Possible and Ask the Plan to Review It Early	230	(1)
Come to Court Prepared	230	(2)
Charge by the Hour or Outsource Your QDRO Work	232	(1)
Follow Through, Follow Through, Follow Through!	233	(1)
Review QDROs Every Three to Five Years	234	(1)
QDROs: From Headache to Enhanced Employee Benefit for Plan Administrators and Their Lawyers	235	(14)
Introduction	235	(1)
Write User-Friendly QDRO Procedures	235	(3)
Take an Educational Approach, Not an Adversarial Approach	238	(1)
Follow Your Own QDRO Procedures and Document Your Actions	239	(1)
Establish a Personal Relationship with Every Participant	240	(1)
Don't Take Sides	241	(1)
Always Show Respect for the Trial Judge	242	(3)
Don't Give Legal or Tax Advice to the Participant or the Alternate Payee	245	(1)
Don't Undercut the Participant's Lawyer	245	(1)
Don't Review the State Law Aspects of the DRO	246	(1)
Pay Compliments When They Are Deserved	247	(2)
Managing IV-D Agencies to Collect Child Support with QDROs	249	(24)
Advantages of QDROs for Child Support Enforcement	249	(1)
Misconceptions about Child Support QDROs	250	(1)
Strengths and Weaknesses of QDROs	251	(1)
When Should IV-D Agencies Use QDROs?	252	(1)
How Can a IV-D Agency Begin to Use QDROs?	253	(1)
Costs and Benefits	253	(1)
Practical Tips and Techniques	254	(4)
Know the Law	254	(1)
Redesign Your Case Intake and Information-Gathering Procedures	254	(1)
Identify and Designate QDRO Specialists	255	(1)
Train Your QDRO Specialists and the Judiciary	255	(1)
Set Policy Guidelines to Decide When You Should Use QDROs	255	(1)
Be Persistent	256	(1)
Draft Your DROs to Start the Payments as Soon as Possible	256	(1)
Periodically Review Each QDRO Case	256	(1)
Be Creative	257	(1)
Training Is Not an Event; It's a Process	257	(1)
Model Child Support QDRO for IV-D Agencies	258	(12)
Parties	258	(1)
Domestic Relations Law	258	(1)
Relationship of Alternate Payee to Participant	259	(1)
Identity of Plan	259	(1)
Division of Payments	260	(1)
Part A: Division of Defined Benefit Plan: Plan Already In Pay Status or Shared Interest Approach	260	(2)
Part B: Division of Defined Benefit Plan: Separate Interest Approach	262	(1)
Part C: Division of Defined Contribution Plan	263	(1)
Duration of Payments	264	(2)
Recomputation of Participant's Benefits	266	(1)
Effect of Order	266	(1)
Role of IV-D Agency	267	(1)
Participant Not to Interfere with Alternate Payee's Rights	267	(1)
Pension Benefit Guaranty Corporation Takeover	268	(1)
Tax Effect	268	(1)
Reservation of Jurisdiction	269	(1)
Final Quality Control Check	270	(1)
Child Support DRO Checklist	271	(2)
Family Court Judges and QDROs	273	(6)
Introduction	273	(1)
Require Early Discovery and Prompt Disclosure	273	(1)
Enlist the Plan's Cooperation	274	(1)
Make the Parties and Their Lawyers Come to Court Prepared	275	(1)
Be Creative	276	(1)
A Quick Test for Evaluating DROs	276	(1)
Recognize that ERISA Is a Power-Sharing Arrangement	277	(1)
Help the Lawyers Who Appear Before You Improve Their Professional Skills	278	(1)
Conclusion	279	(2)
Appendices	281	(84)
Appendix A: Text of Sections 1055 and 1056(d) of ERISA	281	(16)
Appendix B: Model Letter to Plan Requesting Disclosure of Benefits Information	297	(4)
Appendix C: Model Letter to Plan Transmitting DRO for Qualification and Asking for of Payment Features	301	(4)
Appendix D: Model Document Discovery Request/Subpoena Duces Tecum	305	(2)
Appendix E: Model Interrogatories	307	(2)
Appendix F: Model Deposition Questions for Participant	309	(4)
Appendix G: Model Deposition Questions for Plan Official	313	(6)
Appendix H: Model Release of Information Form	319	(2)
Appendix I: Model Client Letter and Questionnaire	321	(6)
Appendix J: QDRO Management Procedures Checklist for IV-D Agencies and Private Law Practices	327	(4)
Appendix K: Plan Administrator's or Counsel's QDRO Management Procedures Checklist	331	(4)
Appendix L: How to Read an Annual Benefits Statement	335	(2)
Appendix M: Uniformed Services Former Spouses' Protection Act: Dividing Military Retired Pay	337	(14)
Appendix N: DoD Financial Management Regulation, Volume 7B, Chapter 29	351	(14)
Table of Cases	365	(8)
Index	373