Rightfully Yours. Gary A. Shulman

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СКАЧАТЬ the pension plans” under which your ex-husband is covered, they may say that he is covered under just one pension plan. What they may fail to tell you is that your ex-husband is also covered under the company 401(k) and the employee stock ownership plan (ESOP), which are technically not “pension plans.” If you learn to ask plan administrators questions they can readily answer (avoid 40-page interrogatories) and never order them to do anything, the entire discovery and QDRO process can be sped up.

      If the plan administrator takes a dislike to your attorney’s efforts to qualify the QDRO, only you will be the loser. Plan administrators have a fiduciary obligation to review your QDRO in a prudent and timely manner, but they can and do let them sit for many, many months. Worse, if the QDRO is deemed deficient in some way, they are not obligated to tell you or your attorney what the deficiencies are. They may send you a one-sentence letter stating that the QDRO does not qualify and to please try again.

      The importance of exercising good behavior in dealing with the plan administrator cannot be overemphasized. Your attorney’s hardball tactics — useful and sometimes necessary in the courtroom — will fail when dealing with the plan administrator’s review of a QDRO.

      When you do confront plan administrators who are apathetic, overpaternalistic, or very adversarial, learn to bite your lip and keep your cool. Unfortunately, Congress, in its infinite wisdom, gave plan administrators nearly total discretionary authority over employee benefit matters relating to the domestic relations arena. The federal pension law known as ERISA, however, does provide participants and beneficiaries with certain rights regarding their benefits and information about them. But think of ERISA litigation only as your last resort.

      3. Problems in Discovery

      Providing the plan administrator with a reasonable amount of time to reply to your (or your attorney’s) written requests for information and to review your QDRO will help with your relationship. Your attorney should be very cautious with his or her discovery approach. His or her requests for information may frequently be construed in a way that gives an unfair advantage to your ex-husband. Plan administrators have an uncanny ability to mold their answers to fit your questions. In other words, it’s not what they say that can hurt you, it’s what they don’t say. Here are a series of examples that should aid you in understanding the need to exercise due diligence in the discovery process:

      • The plan administrator is requested to identify the participant’s current balance in the company savings plan. You are told that the participant has $4,000 in the plan. Unknown to you and your client, the participant took a $14,000 loan just days earlier.

      • An auto worker’s plan administrator is asked to calculate the participant’s accrued benefit under the defined benefit pension plan. You and your attorney are told that he has accrued a pension of $957 a month. However, no one tells you that in one year, at age 49, he can retire at $990 a month for life, with an additional $1,050 monthly pension supplement until he reaches age 62.

      • The administrator is asked to reveal all pension plans under which the participant is currently covered. Based on your attorney’s discovery letter, you are informed that he is covered under a defined benefit plan that will pay $645 a month at age 65. The company does not reveal that he has a 401(k) savings plan with a balance of $23,000. Remember, your attorney only inquired about the “pension plan” and not about the savings plan.

      • The plan administrator at the electrical workers “local 99” pension fund is asked to calculate the participant’s accrued benefit. However, no one reveals that the participant is also covered by the electrical workers “national” pension fund as well. This means that he is covered under two separate defined benefit pension plans at the same time. He’s covered under the local union pension plan and the national union pension plan.

      • The company is requested to calculate a participant’s accrued benefit. The written response indicates that no benefit is available because the participant has only been employed for four years. He has not yet satisfied the plan’s vesting requirement. However, the participant has already worked there for four years and has started to accrue a pension, half of which may be marital. They don’t tell you that he needs only one more year of service to become 100 percent vested in his accrued pension benefit. It is also well-settled law nowadays that a nonvested pension benefit does have value at divorce and should be considered when equitably dividing the marital portion of the pension benefits.

      4. Your Rights under the Federal Pension Law Called ERISA

      The Employee Retirement Income Security Act of 1974 (ERISA) entitles plan participants and beneficiaries to receive the following information regarding their plan benefits. Remember, once your QDRO is drafted, you, as alternate payee, have the same rights as a plan beneficiary to receive information from the plan. You are entitled to do the following:

      (a) Review plan documents. All plan participants and beneficiaries can examine, without charge and during regular working hours, all plan documents, including plan contracts and copies of all documents filed with the us Department of Labor, such as detailed annual reports and plan descriptions.

      (b) Obtain a copy of plan documents. All plan participants and beneficiaries can obtain a copy of all plan documents and other plan information by writing to the plan administrator’s office. The administrator may make a reasonable charge for copies (usually not more than 25 cents per page).

      (c) Receive a copy of the plan’s annual financial report. The plan administrator is required by law to provide all plan participants with a copy of the summary annual report.

      (d) Receive an accrued benefit statement. Upon written request, a plan administrator must furnish participants or plan beneficiaries with a statement regarding their rights to receive a benefit under the plan, and the amount of such benefits. The administrator must provide this accrued benefit calculation free of charge but is not required to recalculate it more frequently than once per year.

      (e) Receive a summary plan description. One of the major obligations of a plan administrator is to furnish plan summaries (called summary plan descriptions, or spds) to all plan participants and beneficiaries. The purpose of the spd is to provide a description of the key features of the plan in an easy-to-understand manner. It might be a good idea to request an spd once your QDRO is approved. The spd contains some information that may be of interest to you, such as early commencement reduction factors if you decide to start your benefits before your ex-husband’s normal retirement age. It also includes all of the payment options from which you may elect to receive your benefits.

      5. Administrative Fees for Processing QDROs

      One gray area in the administration of QDROs by a plan administrator deals with fees charged to participants or alternate payees. Many companies today still charge an alternate payee for processing a QDRO in accordance with the requirements of ERISA and Section 414(p) of the Internal Revenue Code. Some Fortune 500 companies request advance payment of $200 to $300 to accompany a QDRO before they will determine whether it qualifies.

      The economics of dealing with QDROs can cause companies to increase expenditures to their attorneys, actuaries, and consultants for the review and processing of QDROs. But you might wonder whether administrative fees are fair, considering that plan administrators are required by statute to make qualifying determinations regarding QDROs. What can you do when the company’s written administrative procedures dictate that a certain amount, a “QDRO processing fee,” will automatically be deducted from their distribution? You will probably have as much success fighting city hall over a parking ticket.

      Some clarification СКАЧАТЬ