QDRO Drafting Boot Camp: Preparing QDROs for 401(k)s and Similar Defined Contribution Plans

Transcription

1 Presenting a live 90-minute webinar with interactive Q&A QDRO Drafting Boot Camp: Preparing QDROs for 401(k)s and Similar Defined Contribution Plans Strategies for Family Law Practitioners to Help Ensure Administrator Approval and Avoid Unintended Loss of Retirement Benefits THURSDAY, MAY 25, pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: William J. Cantrell, Esq., Cantrell Duarte, Tampa, Fla. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions ed to registrants for additional information. If you have any questions, please contact Customer Service at ext. 10.

2 [INSERT CASE CAPTION] QUALIFIED DOMESTIC RELATIONS ORDER This Order is entered in connection with a division of marital property pursuant to the domestic relations laws of the State of [Insert State Name]. This Order is intended to be a qualified domestic relations order within the meaning of Section 414(p) of the Internal Revenue Code of 1986, as amended (the Code ) and Section 206 of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ). It is hereby ORDERED, ADJUDGED AND DECREED: 1. Participant Information. The Plan Participant is [Insert Name], whose last known address is [Insert Address], whose date of birth is [Insert DOB], and whose Social Security Number will be provided under separate cover. 2. Alternate Payee Information. The Plan Alternate Payee is [Insert Name], whose last known address is [Insert Address], whose date of birth is [Insert DOB], and whose Social Security Number will be provided under separate cover. The Alternate Payee is the [Insert: Spouse/Former Spouse/Child] of the Participant. 3. Plan Name. The plan to which this Order applies is [Insert Plan Name] (the Plan ). 4. Amount of Benefits Assigned. The Alternate Payee is hereby assigned and awarded [Insert Percentage (%)] of the Participant s total account balance in the Plan as of [Insert either: (the date a separate account is established for the Alternate Payee) or (specific date)] (or the earliest valuation date thereafter) ( Assignment Date ), as adjusted for any subsequent interest, dividends, and investment gains and losses beginning on the Assignment Date until the date of total distribution of the Alternate Payee s share of

3 benefits. The total account balance includes: (i) all vested benefits in the Participant s account as of the Assignment Date, [Insert if Assignment Date is a specific date (i.e., prior to the date a separate account is established for the Alternate Payee): (ii) all unvested benefits in the Participant s account as of the Assignment Date that became vested on or before the date the Plan administrator determines this Order to be qualified], (iii) any contributions made to the Participant s account that are attributable to the time period ending on the Assignment Date (whether such contributions are made before or after the Assignment Date), and (iv) any forfeitures allocated to the Participant s account that are attributable to the time period ending on the Assignment Date (whether such contributions are made before or after the Assignment Date). The Alternate Payee s share of benefits shall be calculated on a pro-rata basis among the Participant s account(s) and/or investment fund(s). To the extent there are any outstanding loans from the Participant s account, the Alternate Payee s assigned benefits will be calculated [before/after] such loan amount is subtracted from the Participant s total account balance. 5. Establishment of Separate Account. Within a reasonable period after receipt of this Order, the Plan administrator shall determine whether this Order is a qualified domestic relations order within the meaning of Code Section 414(p) and ERISA Section 206 and shall notify the Participant and the Alternate Payee of such determination. As soon as practicable after the Plan administrator has determined that this Order is a qualified domestic relations order, the Plan administrator shall take such actions as are required to establish a separate Plan account for the benefit of the Alternate Payee, which shall be in the amount specified in paragraph 4 of this Order. 6. Timing of Benefit Distribution. The Alternate Payee may elect to receive 2

4 benefit payments on or after the Participant s earliest retirement age (as defined by Code Section 414(p)(4)(B) and ERISA Section 206(d)(3)(E)(ii)) or at the earliest date permitted by the Plan. 7. Form of Benefit. The Alternate Payee shall be entitled to elect any form of benefit payment permitted by the Plan, except that the Alternate Payee may not receive a benefit in the form of a joint and survivor annuity for the Alternate Payee and the Alternate Payee s subsequent spouse, if any. 8. Death of Alternate Payee. In the event of the death of the Alternate Payee prior to the Alternate Payee receiving the full amount of the benefits assigned under this Order, the Alternate Payee s beneficiary (as set forth by the Alternate Payee s beneficiary designation made in accordance with the terms of the Plan and, if no beneficiary was properly designated, by the terms of the Plan) shall receive the remainder of any unpaid benefit assigned under this Order. 9. Death of Participant. The death of the Participant shall have no effect on the amount of benefit assigned by this Order to the Alternate Payee. 10. Taxation of Distributions. The Participant and the Alternate Payee shall each be responsible for any of his or her own federal, state, and local income taxes or other taxes attributable to distributions from the Plan that are received by the Participant and the Alternate Payee, respectively. 11. Savings Clause. This Order is not intended and should not be construed: (i) to require any benefit or form of payment to the Alternate Payee not otherwise permitted under the terms of the Plan, (ii) to require the Plan to pay increased benefits, or (iii) to require payment of benefits to the Alternate Payee which are required to be paid to 3

5 another alternate payee under a prior qualified domestic relations order. 12. Constructive Receipt. In the event the Plan inadvertently pays to either the Participant or the Alternate Payee any benefits that are the property of the other party pursuant to the terms of this Order, such party shall immediately reimburse such payments directly to the Plan to allow the Plan to correct the error. 13. Improper Actions by Participant. The Participant shall not take any actions, affirmative or otherwise, that circumvent the terms and provisions of this Order, or that diminish or extinguish the rights and entitlements of the Alternate Payee as forth in this Order. If the Participant takes any action or inaction to the detriment of the Alternate Payee, the Participant shall be required to make sufficient payments directly to the Alternate Payee to the extent necessary to neutralize the effects of the Participant s actions or inactions and to the extent of the Alternate Payee s full entitlements as set forth in this Order. 14. Cooperation of Parties. If the Plan administrator of the Plan does not approve this Order as a qualified domestic relations order, then the Alternate Payee and Participant, and/or their respective representatives, shall cooperate and take steps reasonable necessary to resubmit an order that is determined by the Plan administrator to be a qualified domestic relations order. 15. Reservation of Jurisdiction. This Court retains jurisdiction to enforce or amend this Order. DONE AND ORDERED this day of, JUDGE 4

6 APPROVED AS TO FORM AND CONTENT: Alternate Payee Attorney for Alternate Payee Participant Attorney for Participant

7 [INSERT CASE CAPTION] QUALIFIED DOMESTIC RELATIONS ORDER This Order is entered in connection with a division of marital property pursuant to the domestic relations laws of the State of [Insert State Name]. This Order is intended to be a qualified domestic relations order within the meaning of Section 414(p) of the Internal Revenue Code of 1986, as amended (the Code ) and Section 206 of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ). It is hereby ORDERED, ADJUDGED AND DECREED: 1. Participant Information. The Plan Participant is [Insert Name], whose last known address is [Insert Address], whose date of birth is [Insert DOB], and whose Social Security Number will be provided under separate cover. 2. Alternate Payee Information. The Plan Alternate Payee is [Insert Name], whose last known address is [Insert Address], whose date of birth is [Insert DOB], and whose Social Security Number will be provided under separate cover. The Alternate Payee is the [Insert: spouse/former spouse] of the Participant. 3. Plan Name. The plan to which this Order applies is [Insert Plan Name] (the Plan ). 4. Amount of Benefits Assigned. The Alternate Payee is hereby assigned and awarded [Insert Specific Dollar Amount] of the Participant s total account balance in the Plan, together with any interest, dividends, or investment gains and losses beginning on [Insert either: (the date a separate account is established for the Alternate Payee) or (specific date)] (or the earliest valuation date thereafter). The Alternate Payee s share of benefits shall be calculated on a pro-rata basis among all of the Participant s account(s)

8 and investment fund(s). 5. Establishment of Separate Account. Within a reasonable period after receipt of this Order, the Plan administrator shall determine whether this Order is a qualified domestic relations order within the meaning of Code Section 414(p) and ERISA Section 206 and shall notify the Participant and the Alternate Payee of such determination. As soon as practicable after the Plan administrator has determined that this Order is a qualified domestic relations order, the Plan administrator shall take such actions as are required to establish a separate Plan account for the benefit of the Alternate Payee, which shall be in the amount specified in paragraph 4 of this Order. 6. Timing of Benefit Distribution. The Alternate Payee may elect to receive benefit payments on or after the Participant s earliest retirement age (as defined by Code Section 414(p)(4)(B) and ERISA Section 206(d)(3)(E)(ii)) or at the earliest date permitted by the Plan. 7. Form of Benefit. The Alternate Payee shall be entitled to elect any form of benefit payment permitted by the Plan, except that the Alternate Payee may not receive a benefit in the form of a joint and survivor annuity for the Alternate Payee and the Alternate Payee s subsequent spouse, if any. 8. Death of Alternate Payee. In the event of the death of the Alternate Payee prior to the Alternate Payee receiving the full amount of the benefits assigned under this Order, the Alternate Payee s beneficiary (as set forth by the Alternate Payee s beneficiary designation made in accordance with the terms of the Plan and, if no beneficiary was properly designated, by the terms of the Plan) shall receive the remainder of any unpaid benefit assigned under this Order. 2

9 9. Death of Participant. The death of the Participant shall have no effect on the amount of benefit assigned by this Order to the Alternate Payee. 10. Taxation of Distributions. The Participant and the Alternate Payee shall each be responsible for any of his or her own federal, state, and local income taxes or other taxes attributable to distributions from the Plan that are received by the Participant and the Alternate Payee, respectively. 11. Savings Clause. This Order is not intended and should not be construed: (i) to require any benefit or form of payment to the Alternate Payee not otherwise permitted under the terms of the Plan, (ii) to require the Plan to pay increased benefits, or (iii) to require payment of benefits to the Alternate Payee which are required to be paid to another alternate payee under a prior qualified domestic relations order. 12. Constructive Receipt. In the event the Plan inadvertently pays to either the Participant or the Alternate Payee any benefits that are the property of the other party pursuant to the terms of this Order, such party shall immediately reimburse such payments directly to the Plan to allow the Plan to correct the error. 13. Improper Actions by Participant. The Participant shall not take any actions, affirmative or otherwise, that circumvent the terms and provisions of this Order, or that diminish or extinguish the rights and entitlements of the Alternate Payee as forth in this Order. If the Participant takes any action or inaction to the detriment of the Alternate Payee, the Participant shall be required to make sufficient payments directly to the Alternate Payee to the extent necessary to neutralize the effects of the Participant s actions or inactions and to the extent of the Alternate Payee s full entitlements as set forth in this Order. 3

10 14. Cooperation of Parties. If the Plan administrator of the Plan does not approve this Order as a qualified domestic relations order, then the Alternate Payee and Participant, and/or their respective representatives, shall cooperate and take steps reasonable necessary to resubmit an order that is determined by the Plan administrator to be a qualified domestic relations order. 15. Reservation of Jurisdiction. This Court retains jurisdiction to enforce or amend this Order. DONE AND ORDERED this day of, JUDGE 4

11 APPROVED AS TO FORM AND CONTENT: Alternate Payee Attorney for Alternate Payee Participant Attorney for Participant