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CCH® PENSION AND BENEFITS — 3/16/07

EBSA issues regs clarifying timing and order of QDRO issuances

The Employee Benefits Security Administration has issued an interim final regulation, pursuant to requirements of the Pension Protection Act of 2006 (PPA; P.L. 109-280), clarifying that a domestic relations order otherwise meeting ERISA’s qualified domestic relations order (QDRO) requirements will not fail to be treated as a QDRO solely because of when it is issued or because it is issued after, or revises, another domestic relations order. The regulation, which is effective on April 6, 2007, includes examples to address various circumstances involving the timing of a domestic relations order.

Rules issued under directive of PPA

Section 1001 of the PPA requires the Secretary of Labor to issue regulations to clarify the status of certain domestic relations orders under ERISA §206(d)(3) and Code Sec. 414(p). Specifically, the regulations are to clarify that a domestic relations order that otherwise satisfies the requirements to be a QDRO will not fail to be treated as a QDRO solely because (1) the order is issued after, or revises, another domestic relations order or QDRO; or (2) of the time at which it is issued. In addition, the regulations are to clarify that such a domestic relations order is subject to the same requirements and protections that apply to QDROs, including the provisions of ERISA §206(d)(3)(H) and Code Sec. 414(p)(7) (relating to procedures for the period during which it is being determined whether a domestic relations order is a QDRO).

Timing of domestic relations orders

The regulation provides that a domestic relations order otherwise meeting ERISA’s requirements to be a QDRO will not fail to be treated as a QDRO solely because the order is issued after, or revises, another domestic relations order or QDRO. Examples are provided illustrating this rule as applied to a subsequent order revising an earlier QDRO involving the same parties and as applied in the context of a subsequent order involving the same participant and an alternate payee.

The regulation also clarifies that a domestic relations order otherwise meeting ERISA’s requirements to be a QDRO will not fail to be treated as a QDRO solely because of the time at which it is issued. Examples are provided that illustrate that a domestic relations order will not fail to be a QDRO solely because it is issued after the death of the participant, after the parties divorce, or after the participant’s annuity starting date. However, the domestic relations order is subject to the requirements that apply to all QDROs. Thus, for example, although an order will not fail to be a QDRO solely because it is issued after the death of the participant, the order would fail to be a QDRO if it requires the plan to provide a type or form of benefit, or any option, not otherwise provided under the plan.

Comments requested

Interested persons are invited to submit comments on the interim final rule for consideration by the DOL in developing a final regulation. The comments, which must be received by May 7, 2007, may be submitted electronically to e-ORI@dol.gov or through the federal e-rulemaking portal at http://www.regulations.gov.

For more information on this and related topics, consult the CCH Pension Plan Guide.

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