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Lee Sapienza
Chief, Bureau of Policy and Planning
Division of Child Support Enforcement
Office of Temporary and Disability Assistance
40 North Pearl Street
Albany, NY 12243-0001
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2001-06A
ERISA Sec. 206(d)(3)
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Dear Mr. Sapienza:
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This is in response to your request for guidance regarding the qualified
domestic relations order (QDRO) provisions of the Employee Retirement Income
Security Act of 1974, as amended (ERISA).(1) In particular,
you ask whether an income withholding notice issued by the New York State
Office of Temporary and Disability Assistance, Division of Child Support
Enforcement (DCSE), or a county child support enforcement agency operating
under DCSE guidelines, is a judgment, decree, or order within the meaning of
section 206(d)(3)(B)(ii) of ERISA.
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DCSE is a state agency that administers the programs under Part D of Title
IV of the Social Security Act (Title IV-D), generally known as the Child
Support Enforcement (CSE), or IV-D, program, for the State of New York. The
Federal Office of Child Support Enforcement (OCSE), Department of Health and
Human Services, has the responsibility to establish standards for state IV-D
agencies, and manages the distribution of federal funding to the state IV-D
agencies.
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Section 466(a) of the Social Security Act (the act) requires that, as a
condition for receiving federal funding under Title IV-D, states have
procedures to effectuate withholding from the income of obligors amounts
payable as child support in cases that are subject to enforcement by the state.
Section 466(b) of the act prescribes procedures that the states must provide
for with respect to such income withholding. That section also defines
income for purposes of the withholding requirements to include periodic
payments due to an individual pursuant to a pension or retirement program.
You represent that state IV-D agencies, including DCSE, routinely issue
income withholding notices pursuant to federal and state law to enforce
child support orders against obligor parents. The child support orders are
made pursuant to state family or domestic relations law. The income
withholding notices may seek to enforce the child support obligation from
various sources of income, including benefits due to a participant in a
pension plan.
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You represent that notices issued by DCSE and county child support
enforcement agencies are frequently determined not to be QDROs by plan
administrators. You represent that these plan administrators contend that an
income withholding notice is not a judgment, decree, or order, and therefore
not a domestic relations order as defined in section 206(d)(3)(B)(ii) of
ERISA. As a result, when a pension plan rejects an income withholding
notice, DCSE or the county child support enforcement agency must obtain a
court order requiring the plan to withhold the necessary child support
payments, which order then generally will be accepted as a QDRO by plan
administrators.
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Section 206(d)(1) of ERISA generally requires that benefits provided under a
pension plan may not be assigned or alienated. Section 206(d)(3)(A) of ERISA
provides that the anti- assignment and alienation provisions of section
206(d)(1) apply to the assignment or alienation of benefits pursuant to a
domestic relations order, unless the order is determined to be a qualified
domestic relations order. Section 206(d)(3)(A) further provides that pension
plans must provide for the payment of benefits in accordance with the
applicable requirements of any QDRO.
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Section 206(d)(3)(B) of ERISA defines the term
qualified domestic relations order for purposes of section 206(d)(3) as a
domestic relations order which creates or recognizes the existence of an
alternate payee’s right to, or assigns to an alternate payee the right
to, receive all or a portion of the benefits payable with respect to a
participant under a plan, and which meets the requirements of section
206(d)(3)(C) and (D).(2)
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The term domestic relations order is defined in section
206(d)(3)(B)(ii) as any judgment, decree, or order (including approval of a
property settlement agreement) which relates to the provision of child
support, alimony payments, or marital property rights to a spouse, former
spouse, child, or other dependent of a participant, and is made pursuant to
a state domestic relations law (including a community property law).
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The term alternate payee is defined by ERISA section
206(d)(3)(K) to mean any spouse, former spouse, child or other dependent
of a participant who is recognized by a domestic relations order as having
a right to receive all, or a portion of, the benefits payable under a plan
with respect to such participant.
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Section 206(d)(3)(G) of ERISA requires the plan administrator to determine
whether a domestic relations order received by the plan is qualified, and to
administer distributions under such qualified orders, pursuant to reasonable
procedures established by the plan.
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When a pension plan receives an order requiring that all or part of the
benefits payable with respect to a participant be distributed to an
alternate payee, the plan administrator must determine that the judgment,
decree, or order is a domestic relations order within the meaning of section
206(d)(3)(B)(ii) of ERISA - i.e., that it relates to the provision of child
support, alimony payments, or marital property rights to a spouse, former
spouse, child, or other dependent of the participant, and that it is made
pursuant to a state domestic relations law by a state authority with
jurisdiction over such matters. Additionally, the plan administrator must
determine that the order is qualified under the requirements of section
206(d)(3)(B)(i) of ERISA.
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It is the view of the department that an income withholding notice issued by
DCSE or county child support enforcement agencies (as described in your
submission) as part of the state’s IV-D program, is a domestic relations
order as defined in section 206(d)(3)(B)(ii) of ERISA. The notice relates to
the provision of child support to a child of a participant in a pension
plan, enforces a child support order that is made pursuant to state family
or domestic relations law, and is made by DCSE or a county child support
enforcement agency, which have jurisdiction over child support matters. We
note in particular that section 206(d)(3)(B)(ii) does not specify that in
order for a judgment, decree, or order to be a domestic relations order for
the purposes of section 206(d)(3) that it must be issued by a court.
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While a withholding notice issued by DCSE may constitute a domestic
relations order for purposes of section 206(d)(3) of ERISA, the
administrator of a pension plan that receives such a notice is still
obligated to determine whether the notice is a qualified domestic relations
order as defined in section 206(d)(3)(B). Whether any notice issued by the state,
including the Order/Notice To Withhold Income For Child Support (the form
developed by OCSE that state IV-D agencies are required to use to enforce
child support obligations), satisfies the requirements of section
206(d)(3)(C) and (D) is an inherently factual question on which the department
is unable to opine.
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This letter constitutes an advisory opinion under ERISA Procedure 76-1.
Accordingly, it is issued subject to the provisions of the procedure,
including section 10 thereof relating to the effect of advisory opinions.
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Sincerely,
Louis Campagna
Chief, Division of Fiduciary Interpretations
Office of Regulations and Interpretations
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References to the Internal Revenue
Code sections that parallel the provisions of section 206(d)(3) of
ERISA (the QDRO provisions) are omitted from the following, but may be
assumed to be incorporated by reference when the parallel provision of
section 206(d)(3) is cited.
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Section 206(d)(3)(C) provides that
in order for a domestic relations order to be qualified, the order
must clearly specify:
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The name and last known mailing
address (if any) of the participant and the name and mailing
address of each alternate payee covered by the order
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The amount or percentage of the
participant’s benefits to be paid by the plan to each such
alternate payee, or the manner in which such amount or percentage
is to be determined
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The number of payments or period
to which such order applies
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Each plan to which the order
applies
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Section 206(d)(3)(D) specifies that a domestic
relations order is not qualified if it requires: (1) the plan to provide any type of
benefit, or any option, not otherwise provided by the plan; (2) the plan to provide increased
benefits (determined on the basis of actuarial value); (3) the payment of benefits to an
alternate payee which are required to be paid to another alternate
payee under another order previously determined to be a qualified
domestic relations order. Section 206(d)(3)(E) provides that an order may not
provide that an alternate payee receive a benefit earlier than the date on
which the participant reaches his or her earliest retirement age, unless
the plan permits payments at an earlier date. Earliest retirement
age is defined as the earlier of: (1) The date on which the participant is
entitled to receive a distribution under the plan; (2) the later of:
(a) the date the participant reaches
age 50; (b) the earliest date on which the
participant could begin receiving benefits under the plan if the
participant separated from service with the employer.
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