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Old DRO found to be not Qualified
Benefits & Compensation
Old DRO found to be not Qualified
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
While cleaning up old benefit files, we ran across a Domestic Relations Order (signed and filed with the courts) which appears to have been never completed. There is no indication that we ever accepte
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Forums » Topic Forums » Benefits & Compensation » Old DRO found to be not Qualified
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Old DRO found to be not Qualified
posted at 6/3/2010 10:45 AM EDT
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Posts: 24
First: 10/13/2005 Last: 12/8/2010 |
While cleaning up old benefit files, we ran across a Domestic Relations Order (signed and filed with the courts) which appears to have been never completed. There is no indication that we ever accepted or rejected it. The DRO is clearly NOT Qualified. Fortunately, the Participant is still an employee. Has anyone ever ran across this? Would you contact the employee and ask for any paperwork related to this? The year of divorce was 1996. |
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Old DRO found to be not Qualified
posted at 6/3/2010 4:49 PM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
I would check with your attorney, your TPA, your benefits consultant or anyone else that has access to your pension/401k plan. Usually the company itself is a fiduciary to the plan and has responsibilities above and beyond. If you paid benefits to the wrong person because of a failure to act many years before, it is very possible that you would have to pay the second set of benefits to the real beneficiary.
It could easily be that the divorce was never finalized. But I would hesitate to payout any plan benefits since the plan has been put on notice. I would do a lot of research first. Does your plan document have QDRO procedures? I would also suggest posting this out on the QDRO board at BenefitsLink. They have a lot of Benefits Specialists of specific types of plans and issues....whereas I think most of us here are more HR Generalists. (I worked on 401k's and exec benefits, but it has been since the late 90s, so my knowledge has not kept up as much as I wish it had!) |
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Old DRO found to be not Qualified
posted at 6/4/2010 3:35 AM EDT
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Posts: 24
First: 10/13/2005 Last: 12/8/2010 |
I appreciate your recommendations.
Fortunately, the benefit is not in pay status yet so we have some time to fix this mess. We are also confident the divorce was finalized because the participant (who is still an employee) actually remarried another employee. Wisconsin also offers online access to Circuit Court records, which confirms the divorce. Yes, we have QDRO procedures. Unfortunately, they weren't followed in this case, so now its my problem. Thank you again. |
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Old DRO found to be not Qualified
posted at 6/10/2010 6:30 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
Having been a Plan Administrator what I would do is immediately send a certified letter to both parties and their attorneys advising them that the document you have on file is not valid and explain wha they must to make it acceptable( after having confirmed same with your plan's ERISA attorney.
The good news is that you have not paid out any plan assets. It is up to the two parties to satisfy you. Note one thing, in the event that the current participant leaves your employ I would not pay out ANY plan assets until you are advised by a court decree or a valid QDRO to do so. You must have absolutely clear and valid directions before any plan assets are paid out of the trust. |
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