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Qualified Domestic Relations Orders (QDROs)
Save Time and Money with QDRO Compliance Programs
A QDRO is a court order used to divide pension assets when a plan participant becomes subject to a divorce, alimony or child support. It can apply to 401(k), profit sharing and other qualified pension plan benefits.
When not handled properly, QDRO requests can overwhelm a pension department and result in expensive outside counsel fees.
Dr. Johnson created and administered an in house process for handling QDROs while serving as Managing Director of Benefits Compliance & Pensions for AMR / American Airlines. This time-tested system allowed the pension department to qualify over 600 QDRO decrees annually.
Dr. Johnson now helps pension plan administrators establish and maintain effective QDRO compliance programs. Conformity with “The Retirement Equity Act of 1984,” is essential in responding to QDRO requests.
When presented with a QDRO, pension and benefit plan administrators must first “qualify” the request, including:
- Properly identify the parties, i.e. the participant and the non employee/participant party who will receive part of the benefit (also known as the “alternate payee”);
- Properly identify the plan;
- Clearly state what will be paid to the alternate payee; and
- Adhere to the rights, benefits, features and forms of payment that already exist in the plan. No new rights can be created. For example, if the plan does not provide a lump sum payment option, the QDRO cannot order a lump sum.
Whether you need a review of your existing QDRO program or assistance in implementing a new system, Dr. Johnson can help. Contact him today at 817-909-0778 or mark@erisa-benefits.com to discuss your unique requirements.
ERISA Benefits Consulting, Inc. the affordable alternative.
