Rightfully Yours. Gary A. Shulman

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СКАЧАТЬ by allowing it to charge the account of a plan participant for any QDRO processing that affected this participant. In its opinion, the PWBA stated that an administrator of a retirement plan covered under Title 1 of ERISA may not charge an individual participant or an alternate payee any fees for processing a QDRO to determine whether it satisfies federal requirements for QDROs.

      The rights of alternate payees under QDROs are guaranteed to them under ERISA and the Internal Revenue Code. To allow a plan administrator to charge for something it is required by law to provide flies in the face of equity. The PWBA did state that ERISA allows plans themselves to incur reasonable charges to cover certain costs and that plans may properly pay for reasonable administrative costs in processing QDROs. It distinguished between an alternate payee’s rights to a portion of a participant’s benefits as guaranteed by statute and an optional right that is permitted, but not required, under ERISA.

      Occasionally, charges may be assessed to the participant or alternate payee. For example, a plan administrator may legitimately charge a participant for reasonable expenses incurred in exercising a plan option to allow employee-directed investments or loan processing fees for participants.

      Despite the PWBA’s opinion letter, some plan administrators are still charging participants and alternate payees QDRO processing fees. For example, if your QDRO used the separate interest approach, in which your benefits are actuarially adjusted to your own life expectancy, rather than remaining based on the life expectancy of the plan participant, it appears that the administrator may properly charge the participant or alternate payee for the necessary expenses incurred for hiring an actuary to perform this calculation.

      At least one plan administrator circumvented this fee prohibition by charging only to review draft QDROs (those not yet signed by the judge). Attorneys were required to pay $250 for the review of a nonexecuted QDRO. The administrator failed to inform the attorneys that the fee would be waived if they submitted a QDRO already signed by the judge.

      6. Constructive Notice of a QDRO

      If your attorney is pursuing a QDRO on your behalf, he or she should send an immediate notice to the plan administrator (or even a first-draft, nonexecuted QDRO) to put it on notice of a pending QDRO. A nonexecuted QDRO is one that is not yet signed by the judge — it’s still in draft form. Even if the draft QDRO is deemed not to be qualified, the plan administrator may still withhold the called-for portion to be payable to you pending the submission of a certified order. If your ex-husband is still actively employed, the company may flag his pension file to prevent him from making a sudden, premature distribution, loan, or withdrawal that would be detrimental to you. However, to really help secure your future rights to a share of the benefits, it is usually better to send a certified copy of the QDRO rather than a draft copy. A certified copy is one that is already executed by the court and shows the judge’s signature. If a certified copy is sent, the plan administrator will be required to suspend or withhold the alternate payee’s called-for portion of the benefits, even if the QDRO is otherwise deficient. This is especially important if your ex-husband is already retired or thinking about retiring in the near future.

      7. The Company’s Own Model QDRO Language

      Many large employers have model QDRO language that they like to use to speed up the approval process. Generally, they are pleased to send you this information. Use this language wisely, however. Although it may expedite the approval process, their model language may not have your best interests in mind. Experience shows that it may be a good idea to have your attorney draft his or her own comprehensive QDRO language on the substantive and important issues and then to incorporate some or all of the company’s nonsubstantive model QDRO language verbatim. This generally will help speed up the QDRO approval process. The plan administrator may appreciate the fact that you have succumbed, to some extent, to their total authority over QDROs.

      Some plan administrators effectively try to dictate the terms of a settlement agreement and QDRO by forcing you to use their model language. They may refuse to even look at your QDRO unless it is based entirely on their fill-in-the-blank model language. Not only can this be dangerous, it is clearly an abuse of discretion on the part of plan administrators. The federal pension law, ERISA, does not give them the authority to dictate the terms of a QDRO. They must honor the provisions of a domestic relations order that satisfies the requirements for QDROs as they are set forth under ERISA and the Internal Revenue Code. In this situation, your attorney may have to pursue other avenues, ranging from contacting a director or vice president of the company to initiating an ERISA lawsuit for breach of fiduciary duty. The last approach is expensive and time-consuming.

      On some issues, you should not bend. For example, assume that you were awarded 50 percent of the marital portion of your ex-husband’s accrued benefit as of his date of retirement (using the traditional coverture approach, as discussed in Chapter 7). But many model QDROs prepared by companies permit you only to state your share of the benefit in the form of a fixed-dollar amount or as a percentage of his accrued benefit frozen as of the date of divorce. Remember that under a defined benefit pension plan, it may not be considered equitable to freeze your share of the benefits at divorce. Only the coverture approach will provide you with inflationary protection on your share of the benefits. If you simply fill in the company’s own model QDRO with a fixed-dollar or percentage amount, it will freeze your share of the benefits. Your attorney may have to be assertive with the plan administrator on this issue by requesting, in writing, an explanation of why your language appears to violate ERISA regarding the provision of benefits to an alternate payee under a QDRO. He or she should also, if applicable, let the administrator know that under your state’s well-settled case law, the coverture approach is the recommended approach for dividing benefits under a defined benefit pension plan.

      On other issues, you may have to bite the bullet. For example, some plan administrators will not permit the alternate payee to receive her share of the benefits on an actuarially adjusted basis over her own life expectancy. In other words, they do not accept separate interest QDROs. Although the separate interest approach may benefit you, the administrator will probably not budge on this issue. However, be sure to include postretirement survivorship coverage in this case to assure you of a lifetime of benefits.

      8. The Administrator’s Approval and Signature

      Many attorneys include signature lines at the end of the QDRO so that the plan administrator can approve and sign off on the order. If you want to expedite the approval process, eliminate this signature line. Generally, plan administrators will not sign a QDRO because they are not required to do so under ERISA or the Internal Revenue Code. Many plan administrators will deny a QDRO simply on this basis. They are required to abide by the terms of the QDRO and must furnish a written response indicating the qualified status of the QDRO. This response should sufficiently verify the QDRO’s qualified status.

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