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Some plan administrators are quite exacting in their demands that the QDRO refer to the official ERISA name of a pension plan. When a plan administrator rejects a QDRO for a minor mistake even if it is the simple omission of the word Inc. the parties must go back to court for the judge to sign an amended or corrected QDRO. This detour is both time-consuming and expensive.
The plan administrator has the final say about a QDRO. Many believe that if the judge issues a domestic relations order then the plan must comply and certify it as a QDRO. Not so. The plan cannot be ordered to provide any form of benefit that is not otherwise available under the terms of the plan, and the plan administrator has the final say about whether or not a domestic relations order is a QDRO.
There are many reasons why proposed QDROs are rejected. Sometimes the parties do not know the correct name of the pension plan to be shared. Moreover, when companies are bought and sold, the names of plans may change. The plan name must be the correct, complete legal name. Often, the parties mistakenly use the name of the fiduciary trust company the money holder as the plan name. If the pension holding spouse has a 401(k) plan with XYZ Widgets Company but the money is held in accounts with Vanguard, the correct plan name is something like XYZ Widgets Company 401(k) Plan, not Vanguard 401(k) Plan.
The plan administrator is not required to reject a domestic relations order as defective when it fails to specify factual identifying information that he or she can easily obtain. Minor errors that are not substantive, such as misstating the plan name or the names of the participant or alternate payee or omitting the addresses of the participant or the alternate payee may be remediable with a simple communication with one of the parties or by factual information in the possession of the plan administrator.
By comparison, a substantive error deals with the terms and conditions of the distribution to the alternate payee. Plan administrators are understandably and routinely less forgiving of such mistakes.
Authored By: Theodore K. Long, Jr., President, Pension Appraisers Online, Inc.
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