Determination that judgment is a "domestic relations order."
After receiving a domestic relations order that requires payment of an employee's benefits as part of a divorce proceeding, an employer must determine whether the order is a "qualified" domestic relations order (QDRO) under ERISA. In addition, the employer must establish that the judgment or decree itself is a "domestic relations order." To do so, the employer looks to whether the order provides child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of the employee, and whether it is made pursuant to a state domestic relations law by a state authority with jurisdiction.
Review of state court judgment not required.
An employer may be required to make the initial determination as to whether a court order incident to a divorce proceeding constitutes a QDRO. But the employer is not required to review the determination by a state court as to whether an individual is a spouse, former spouse, child, other dependent, or surviving spouse of the employee under state domestic relations law. Similarly, the employer is not required to review the correctness of decision by a competent state authority under state domestic relations law that the parties are entitled to a judgment of divorce.
Fiduciary duty to consider evidence of fraud.
Evidence that an order relating to marital property was fraudulently obtained calls into question whether the order was issued pursuant to state domestic relations law and, therefore, whether the order is a QDRO under ERISA. Accordingly, employers who have received such information have a fiduciary duty to:
- take reasonable steps to determine the credibility of the evidence, and
- decide how best to resolve the question of the validity of the order without inappropriately involving the plan in the state domestic relations proceeding.
Appropriate actions required of a employer, according to the PWBA, could include:
- relaying evidence to the state court or agency that issued the order and advising that resolution of the matter may affect the employer's determination of whether the order is a QDRO under ERISA, and
- depending on the applicable facts and circumstances, plus the relative costs and benefits, intervening or initiating legal proceedings in state court.
If employers are unable to obtain a response from the state court or agency within a reasonable period of time, they may not independently determine that the order is not valid under state law and, therefore, is not a domestic relations order under ERISA, but must proceed to determine whether the order is a QDRO.
Cites: ERISA Opinion Letters 92-17A, 8-21-92 and 99-13A, 9-29-99.
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The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.