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The following document, which contains sample language for
inclusion in a form for a QDRO and discussion of the sample language, was issued
by the Department of the Treasury and the Internal Revenue Service in compliance
with Congressional directives contained in the Small Business Job Protection Act
of 1986, section 1457(a)(2). It appeared in Internal Revenue Bulletin 1997-2 at
p. 49 (Jan. 13, 1997). This document was developed in consultation with the
Department of Labor and is reprinted here for the convenience of the reader.
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Part III - Administrative, Procedural and Miscellaneous Sample
Language for a Qualified Domestic Relations Order
Notice 97-11
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This Notice provides information intended to assist domestic
relations attorneys, plan participants, spouses and former spouses of
participants, and plan administrators in drafting and reviewing a qualified
domestic relations order ("QDRO"). The Notice provides sample language
that may be included in a QDRO relating to a plan that is qualified under §
401(a) or § 403(a) of the Internal Revenue Code of 1986 ("qualified
plan" or "plan") and that is subject to § 401(a)(13). The Notice
also discusses a number of issues that should be considered in drafting a QDRO.
A QDRO is a domestic relations order that provides for payment of benefits from
a qualified plan to a spouse, former spouse, child or other dependent of a plan
participant and that meets certain requirements.
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Section 401(a)(13)(A) of the Code provides that benefits under a
qualified plan may not be assigned or alienated. Section 401(a)(13)(B)
establishes an exception to the antialienation rule for assignments made
pursuant to domestic relations orders that constitute QDROs within the meaning
of § 414(p). A "domestic relations order" is defined in §
414(p)(1)(B) as any judgment, decree, or order (including approval of a property
settlement agreement) that:
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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
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Is made pursuant to a State
domestic relations law (including a community property law). There is no
exception to the § 401(a)(13)(A) antialienation rule for assignments made
pursuant to domestic relations orders that are not QDROs.
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Section 414(p)(1)(A) provides, in general, that a QDRO is a
domestic relations order that creates or recognizes the existence of an
alternate payee's right, 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 that meets the requirements of paragraphs (2) and (3) of § 414(p).
Section 414(p)(2) requires that a QDRO clearly specify:
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The name and last
known mailing address (if any) of the participant and 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 alternate payee, or the manner in which that
amount or percentage is to be determined
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The number of payments or period
to which the order applies
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Each plan to which the order applies.
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Section 414(p)(3) provides that a QDRO cannot require a plan to
provide any type or form of benefit, or any option, not otherwise provided under
the plan; cannot require a plan to provide increased benefits (determined on the
basis of actuarial value); and cannot require the payment of benefits to an
alternate payee that are required to be paid to another alternate payee under
another order previously determined to be a QDRO. Section 414(p)(4)(A)(i)
provides that a domestic relations order shall not be treated as failing to meet
the requirements of § 414(p)(3)(A) (and thus will not fail to be a QDRO) solely
because the order requires payment of benefits to an alternate payee on or after
the participant's earliest retirement age, even if the participant has not
separated from service at that time. Section 414(p)(4)(B) defines earliest
retirement age as the earlier of:
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The date on which the participant is
entitled to a distribution under the plan, or
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The later of (I) the date the
participant attains age 50, or
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The earliest date on which the participant
could begin receiving benefits under the plan if the participant separated from
service.
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Section 414(p)(5) permits a QDRO to provide that the
participant's former spouse shall be treated as the participant's surviving
spouse for purposes of §§ 401(a)(11) and 417 (relating to the right to receive
survivor benefits and requirements concerning consent to distributions), and
that any other spouse of the participant shall not be treated as a spouse of the
participant for these purposes. An alternate payee is defined under § 414(p)(8)
as 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 the participant.
Section 414(p)(10) provides that a plan shall not fail to satisfy the
requirements of § 401(a), 401(k) or 403(b) solely by reason of payments made to
an alternate payee pursuant to a QDRO.
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Section 1457(a)(2) of the Small Business Job Protection Act of
1996 ("SBJPA") directs the Secretary of the Treasury
("Secretary") to develop sample language for inclusion in a form for a
QDRO described in § 414(p)(1)(A) of the Code and §206(d)(3)(B)(i) of the
Employee Retirement Income Security Act of 1974 ("ERISA") that meets
the requirements contained in those sections, and the provisions of which focus
attention on the need to consider the treatment of any lump sum payment,
qualified joint and survivor annuity ("QJSA"), or qualified
preretirement survivor annuity ("QPSA"). Accordingly, the Service and
Treasury are publishing the discussion and sample QDRO language set forth in the
Appendix to this Notice.
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Section 1457(a)(1) of the SBJPA directs the Secretary to publish
sample language that can be included in a form that is used for a spouse to
consent to a participant's waiver of a QJSA or QPSA. This sample language for
use in spousal consent forms is contained in Notice 97-10 in this Bulletin.
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Section 206(d)(3) of ERISA (29 U.S.C. § 1056(d)(3)) contains
QDRO provisions that are substantially parallel to those of § 414(p) of the
Code. The Department of Labor has jurisdiction to interpret these provisions
(except to the extent provided in § 401(n) of the Code) and the provisions
governing the fiduciary duties owed with respect to domestic relations orders
and QDROs. Section 401(n) gives the Secretary of the Treasury the authority to
prescribe rules or regulations necessary to coordinate the requirements of §§
401(a)(13) and 414(p), and the regulations issued by the Department of Labor
thereunder, with other Code provisions. The Department of Labor has reviewed
this Notice, including its Appendix, and has advised the Service and Treasury
that the discussion and sample language are consistent with the views of the
Department of Labor concerning the statutory requirements for QDROs. This
Notice, including its Appendix, is not intended by the Service or Treasury to
convey interpretations of the statutory requirements applicable to QDROs, but
only to provide examples of language that may be (but are not required to be)
used in drafting a QDRO that satisfies these requirements.
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The appendix to this
notice has two parts. Part I discusses
certain issues that should be considered when drafting a QDRO. Part II contains
sample language that will assist in drafting a QDRO. Drafters who use the sample
language will need to conform it to the terms of the retirement plan to which
the QDRO applies, and to specify the amounts assigned and other terms of the
QDRO so as to achieve an appropriate division of marital property or level of
family support. A domestic relations order is not required to incorporate the
sample language in order to satisfy the requirements for a QDRO, and a domestic
relations order that incorporates part of the sample language may omit or modify
other parts.
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The sample language addresses a variety of matters, but is not
designed to address all retirement benefit issues that may arise in each
domestic relations matter or QDRO. Further, some of the sample language, while
helpful in facilitating the administration of a QDRO, is not necessarily
required for the order to satisfy the requirements for a QDRO. Alternative
formulations would be permissible for use in drafting orders that meet the
statutory requirements for a QDRO.
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The Pension Benefit Guaranty Corporation ("PBGC")
recently published a booklet entitled Divorce Orders & PBGC, which discusses
the special QDRO rules that apply for plans that have been terminated and are
trusteed by PBGC, and provides model QDROs for use with those plans. This
publication may be obtained by calling PBGC's Customer Service Center at 1.800.400.PBGC or via the
PBGC
Web Site.
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Additional information on the rights of participants and spouses
to plan benefits can be found in a two-booklet set published by the Service,
entitled Looking Out for #2. These booklets discuss retirement benefit choices
under a defined contribution or a defined benefit plan, and may be obtained by
calling the Internal Revenue Service at 1.800.TAX.FORM, and asking for
Publication 1565 (defined contribution plans) or Publication 1566 (defined
benefit plans).
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Comments
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The Service invites the public to comment on the QDRO discussion
and sample language included in the Appendix to this Notice, and welcomes
suggestions concerning possible additional sample language. Comments may be
submitted to the Internal Revenue Service at CC:DOM:CORP:R (Notice 97-11), Room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, D.C.
20044. Alternatively, taxpayers may hand-deliver comments between the hours of 8
a.m. and 5 p.m. to CC:DOM:CORP:R (Notice 97-11), Courier's desk, Internal
Revenue Service, 1111 Constitution Ave., N.W., Washington, D.C., or may submit
comments electronically via the IRS
Web Site.
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The principal authors of this Notice are Diane S. Bloom of the
Employee Plans Division and Susan M. Lennon of the Office of the Associate Chief
Counsel (Employee Benefits and Exempt Organizations); however, other personnel
from the Service and Treasury contributed to its development. For further
information regarding this Notice, please contact the Employee Plans Division's
taxpayer assistance telephone service at 202.622.6074/6075, between the hours
of 1:30 p.m. and 4 p.m. Eastern Time, Monday through Thursday. Alternatively,
please call Ms. Bloom at 202. 622.6214 or Ms. Lennon at 202.622.4606.
Questions concerning QDROs may be addressed to Susan G. Lahne of the Pension and
Welfare Benefits Administration, Department of Labor, at 202.219.7461. These
telephone numbers are not toll-free.
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