Who can be an Alternate Payee?
A domestic relations order can be a QDRO only if it creates or recognizes the existence of an alternate payee’s right to receive, or assigns to an alternate payee the right to receive, all or a part of a participant’s benefits. For purposes of the QDRO provisions, an alternate payee cannot be anyone other than a spouse, former spouse, child, or other dependent of a participant.
Reference: ERISA § 206(d)(3)(K), IRC § 414(p)(8)
What information must a domestic relations order contain to qualify as a QDRO under ERISA?
QDROs must contain the following information:
• The name and last known mailing address of the participant and each alternate payee
• The name of each plan to which the order applies
• The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee
• The number of payments or time period to which the order applies
Reference: ERISA § 206(d)(3)(C)(i)-(iv); IRC § 414(p)(2)(A)-(D)
Are there other requirements that a domestic relations order must meet to be a QDRO?
There are certain provisions that a QDRO must not contain:
• The order must not require a plan to provide an alternate payee or participant with any type or form of benefit, or any option, not otherwise provided under the plan
• The order must not require a plan to provide for increased benefits (determined on the basis of actuarial value)
• The order must not require a plan to pay benefits to an alternate payee that are required to be paid to another alternate payee under another order previously determined to be a QDRO
• The order must not require a plan to pay benefits to an alternate payee in the form of a qualified joint and survivor annuity for the lives of the alternate payee and his or her subsequent spouse
Reference: ERISA §§ 206(d)(3)(D)(i)-(iii), 206(d)(3)(E)(i)(III); IRC §§ 414(p)(3)(A)-(C), 414(p)(4)(A)(iii)
May a QDRO be part of the divorce decree or property settlement?
There is nothing in ERISA or the Code that requires that a QDRO (that is, the provisions that create or recognize an alternate payee’s interest in a participant’s retirement benefits) be issued as a separate judgment, decree, or order. Accordingly, a QDRO may be included as part of a divorce decree or court- approved property settlement, or issued as a separate order, without affecting its qualified status. The order must satisfy the requirements described above to be a QDRO.
Reference: ERISA § 206(d)(3)(B); IRC § 414(p)(1)