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Alsee McDaniel, Director
Division of Child Support Enforcement
Department of Human Services
750 North State Street
Jackson, MS 39202
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2002-03A
ERISA Sec. 206(d)
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Dear Mr. McDaniel:
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This is in response to your request for an advisory opinion concerning the
application of section 206(d) of the Employee Retirement Income Security Act
of 1974, as amended (ERISA), with respect to the Mississippi Department of
Human Services, Division of Child Support Enforcement (DCSE). Your
submission contains the following facts and representations.
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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 Mississippi.
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 IV-D
agencies.
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Like other IV-D agencies, DCSE collects child support both for custodial
parents who are receiving economic assistance from the state and for those
who are not receiving such assistance, but have applied for the agencys
services in collecting support payments. DCSE distributes the support
payments that it collects on behalf of the custodial parent as follows. If
the custodial parent has a public assistance arrearage(1) and is no longer
receiving public assistance, DCSE transmits all child support payments it
receives to the custodial parent as current child support payments plus any
existing child support arrearage before any of the payment is applied to the
public assistance arrearage. If the custodial parent has a public assistance
arrearage and is currently receiving public assistance, DCSE applies the
payments it receives first to the public assistance arrearage and transmits
any remaining funds to the custodial parent as current child support
payments. If the custodial parent is not receiving public assistance and has
no public assistance arrearage, then DCSE transmits the entire payment to
the custodial parent. In all cases, DCSE receives the child support
payments, deposits them in its own account, and distributes a check
representing the child support payment (minus any public assistance
arrearages, if applicable) to the custodial parent.
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Section 206(d)(1) of ERISA generally requires pension plans subject to Title
I to provide that plan benefits may not be assigned or alienated. Section
206(d)(3)(A) provides an exception to the general rule for the creation,
assignment or recognition of a right to any benefit payable with respect to
a participant pursuant to a qualified domestic relations order (QDRO).
Section 206(d)(3)(A) further requires that pension plans must provide for
the payment of benefits in accordance with the applicable terms of any QDRO.
Section 206(d)(3) describes the conditions that a domestic relations order
must satisfy in order to be a QDRO, as well as additional rules regarding a
plan administrator's determination of whether a domestic relations order is
a QDRO, how benefits are to be administered pursuant to a QDRO, and
definitions of certain terms used in section 206(d)(3).
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Among other things, section 206(d)(3)(B) provides that a domestic relations
order that creates or recognizes an alternate payee's right to, or assigns
to the alternate payee the right to, receive all or a portion of the
benefits payable with respect to a participant under a plan, and complies
with the requirements of section 206(d)(3)(C) and (D) is a QDRO. A domestic
relations order is defined as any judgment, decree, or order that relates
to, among other things, the provision of child support to a child of a
participant. Alternate payee is defined in 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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You ask whether, under the circumstances described above, DCSE may be
considered an alternate payee within the meaning of section 206(d)(3)(K) of
ERISA, or, in the alternative, whether a domestic relations order that
requires a pension plan to make payments to DCSE on behalf of any alternate
payee named in the order may be a QDRO.
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You argue that in cases in which the custodial parent received public
assistance due, at least in part, to the non-custodial parent’s nonpayment
of ordered child support prior to the issuance of a QDRO, permitting the
IV-D agency to be an alternate payee assures that such amounts are returned
to state and federal governments when child support payments are made
pursuant to the QDRO. In addition, you maintain that public policy favors
allowing IV-D agencies to be alternate payees so that reliable records of
all child support payments can be kept.
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Section 206(d)(3)(K) of ERISA defines the classes of persons who may be
alternate payees for purposes of the QDRO provisions. This provision is part
of an exception to ERISA's general rule that benefits due to a participant
from a pension may not be assigned or alienated, and thus is to be read
narrowly. In the opinion of the Department, an alternate payee cannot be
anyone other than one of the persons identified in section 206(d)(3)(K),
i.e., a spouse, former spouse, child, or other dependent of a participant in
a pension plan. Therefore, DCSE cannot be an alternate payee.
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However, the Department recognizes that circumstances may arise that will
necessitate another person's acting on behalf of an alternate payee, such as
if an alternate payee is a minor or is legally incompetent. In such cases, a
domestic relations order that requires that the plan make payment to someone
with legal responsibility for the alternate payee, such as a guardian or
party acting in loco parentis in the case of such child, or a trustee as
agent for the alternate payee, may still be a QDRO.(2) You state that, while
DCSE's relationship to a child does not rise to the level of a
court-appointed guardian ad litem or to the fiduciary level of a trustee,
DCSE is charged, by federal and state law, to act in the best interests of
each child for which it is acting. DCSE is obligated by law to establish a
non-custodial parent’s child support obligation, to secure and collect
child support payments from any person who is legally liable for such
support, and to disburse support payments to the custodial parent. DCSE is
authorized to use any method available under state law to establish and
enforce a parent’s support obligations. You therefore contend that DCSE
has essentially the same level of responsibility as a guardian or trustee
with respect to child support payments, since it is legally obligated to act
on the child's behalf, and any child support received goes to the custodial
parent on behalf of the child.
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It appears that DCSE, in the circumstances you describe, acts as an agent
for the child on whose behalf it is acting. The agency receives funds from a
pension plan in which the obligor is a participant, and forwards all of
those funds to the alternate payee, or the alternate payee's custodial
parent, except for the reimbursement to DCSE of public assistance
arrearages,” which, as noted above, represent advances by the state to the
custodial parent of unpaid support obligations. Under these circumstances,
it is the opinion of the Department that the fact that a domestic relations
order names DCSE as the party to whom payments are to be made on behalf of
an alternate payee, would not constitute grounds on which a plan
administrator could find the order not to be qualified.
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This letter constitutes an advisory opinion under ERISA Procedure 76-1 (41
Fed. Reg. 36281, August 27, 1976). Accordingly, this letter is issued
subject to the provisions of the procedure, including section 10 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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cc: Darrell Baughn
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Pursuant to the IV-D program, State
laws provide that a custodial parent who receives public assistance
from a State is deemed to assign to the State any right or claim to
child support payments that the non-custodial parent is obligated to
make, but has not made, to the extent of the owed child support
payments plus the State's costs incurred in collecting such support
payments. These public assistance payments are considered public
assistance arrearages that are owed to the State IV-D agency. In such
situations, the public assistance is, essentially, an advance by the
State of the child support obligations of the non-custodial parent to
the extent of nonpayment, and the retention by the State of all or a
portion of the support payments subsequently secured from the
non-custodial parent is reimbursement of such advances.
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See, Staff of the Joint Committee on
Taxation, Explanation of Technical Corrections to the Tax Reform Act
of 1984 and Other Recent Tax Legislation, 100th Cong., 1st Sess.
(Comm. Print 1987) at 222.
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