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Timely Filing of a Domestic Relations Order

This Practice Aid has been updated and revised to recognize the changes to 29 CFR 2530.206, which became effective on August 9, 2010. As a result of these changes many Qualified Domestic Relations Order procedures have been impacted. This Practice Aid endeavors to highlight significant changes.

What Constitutes Timely Filing?
After being involved in the preparation of in excess of 30,000 Domestic Relations Orders, it is our view that the sooner a draft Domestic Relations Order is presented to the Plan’s Administrator the greater the margin of safety for the attorney representing the alternate payee. Without question, regarding Domestic Relations Orders the burdened attorney is the attorney representing the alternate payee. Although we urge swift submission of a draft Domestic Relations Order, reality intervenes, causing the time between settlement and submission of a draft Order to become considerable. This naturally raises a critical consideration:

When is it too late to file a Domestic Relations Order?
There is no single answer to this question. We explore several scenarios resulting in differing outcomes. The following discussions illustrate the complexity of this issue.

How will a Plan Administrator treat a posthumous assignment of survivor benefits to the former spouse of a deceased employee?

As this discussion indicates there is no single response that satisfies all circumstances. What is clear is that failure to have a Qualified Domestic Relations Order in place prior to the death of the employee or retiree will result in expensive litigation (in a federal venue) that is unlikely to enjoy a high probability of success. Due to the challenges that confront an attorney representing the alternate payee seeking to obtain survivor benefits, it is recommended in the strongest terms that this practitioner have the Domestic Relations Order filed as promptly as circumstances permit. If the Domestic Relations Order is unlikely to be prepared prior to divorce, then the attorney representing the alternate payee is advantaged by alerting the plan to the fact that a divorce action is pending and that as part of the settlement the former spouse will be entitled to survivor benefits. It is further suggested that as part of this communication the attorney request written confirmation from the Plan Administrator of the fact that the Plan has been notified of a pending submission of a Domestic Relations Order containing a survivor annuity provision.

Posthumous Domestic Relations Orders.
The treatment of your Order in large part depends on facts, circumstances and venue.

Fact Pattern:
H divorces. As part of this settlement H’s Wife is awarded a survivor annuity benefit. No Domestic Relations Order is filed. H remarries, survives two years and then dies. At the time of his death pursuant to 26 U.S.C 417 H’s current wife has a full right to her spouse’s survivor benefit. However, at this point H’s former spouse based on the Final Judgment of Dissolution of Marriage seeks entry of a Qualified Domestic Relations Order providing her with survivor benefits. Who will prevail?

Operating to the disadvantage of the former spouse is what is likely to be a controlling event; “when did the survivor interest of H’s current spouse vest”? A strong argument can be made that her survivor rights vested upon marriage to H (or if the rules are rigidly observed, after one year of marriage). Does H’s remarriage and the “vesting” of survivor rights in H’s second wife operate to defeat the survivor interest of the alternate payee? The Supreme Court has not had a case with this fact pattern. Federal Circuit Courts differ as to outcome. Again, the attorney is urged to file the Domestic Relations Order as promptly as circumstances permit in order to avoid this scenario.


H divorces. As part of this settlement H’s Wife is awarded a survivor annuity benefit. No Domestic Relations Order is filed. H did not remarry. Subsequent to H’s death the former spouse based on the Final Judgment of Dissolution of Marriage seeks entry of a Qualified Domestic Relations Order providing her with survivor benefits. Can such Order be issued?

If one follows the plain language of the revised Regulation, then the immediately above scenario offers hope for the former spouse.

…A domestic relations order shall not fail to be treated as a qualified domestic relations order solely because of the time at which it is issued…

The updated rule is clarified by the following examples:

Example One:
Orders issued after death. Participant and Spouse divorce, and the administrator of Participant's plan receives a domestic relations order, but the administrator finds the order deficient and determines that it is not a QDRO. Shortly thereafter, Participant dies
while actively employed. A second domestic relations order correcting the defects in the first order is subsequently submitted to the plan. The second order does not fail to be treated as a QDRO solely because it is issued after the death of the Participant. The result would be the same even if no order had been issued before the Participant's death, in other words, the order issued after death was the only order (emphasis mine).

Example Two: Orders issued after divorce.
Participant and Spouse divorce. As a result, Spouse no longer meets the definition of “surviving spouse” under the terms of the plan. Subsequently, the plan administrator receives a domestic relations order requiring that Participant’s Former Spouse be treated as the Participant's surviving spouse for purposes of receiving a death benefit payable under the terms of the plan. Recall, absent a QDRO, only the participant's surviving spouse at the time of his death is an eligible surviving spouse. The Service maintains that this order does not fail to be treated as a QDRO solely because, at the time it is issued, Spouse no longer meets the definition of a “surviving spouse” under the terms of the plan.

It is our view that reliance on the above two examples is likely to prove successful only as a result of additional litigation. It may be unwise to presume that all Plan Administrators are familiar with the revised regulations. Frequently, the larger the plan, the greater the difficulty (read “expense”) an alternate payee is likely to experience. Do these two examples offer encouragement for remedial action in support of an alternate payee. Perhaps? Prevailing is your objective. Nevertheless, there must be concern with the cost at which victory could be attained. It is better to avoid expensive litigation in the federal venue by timely submission of a well-crafted Domestic Relations Order. There are no advantages to the “tardy” filing of a Domestic Relations Order.

Further Discussion of the Revised Regulation.
Example One:
H and W divorce. W was awarded 35% of H’s monthly retirement benefits from H’s Qualified Defined Benefit Plan. H, subsequently retired. No Order was filed. Years pass. H, remains alive and retired.

Can a Domestic Relations Order be filed years after the divorce assigning to W 35% of H’s monthly retirement benefits?

Yes. In this scenario there is no established time limit for filing. W, can begin receiving her share of the benefits subsequent to Order Qualification. However, it is to be noted that all Orders are Qualified prospectively. What must be recognized is the loss to the alternate payee of her assigned benefit stream for the period during which no Order existed.

Can the Order in this example provide for survivor benefits to the W?

No. The Property Settlement Agreement awarded the alternate payee 35% of H’s monthly retirement benefits. There was no specific reference to survivor benefits in the Property Settlement Agreement, thus at the time of H’s retirement he was free to elect any option of his choice. Since H was not married at the time of his retirement he elected the option that paid him the largest benefit, a Single Life Annuity. In the great majority of Qualified Defined Benefit Plans a retirement option election becomes irrevocable upon the retiree’s receipt of his or her first retirement payment. A contra view is expressed in Files v. Exxon, 428 F.3d 478. It is the author’s view that this decision was not well reasoned. Moreover, based on the Domestic Relations Order rules of the Federal Civil Service and the Military, Files cannot be applied to these retirement systems.

Three years later W’s attorney filed a Domestic Relations Order which was accepted by the plan. W’s monthly interest was $1,500.00. Thus, W has lost not less than $54,000.00. Absent cause for this filing delay who could be deemed liable for W’s loss?

Treatment of Superseding Domestic Relations Orders.
A “Superseding Domestic Relations Order” is defined:

  • Causes an Earlier Qualified Domestic Relations Order to be Set Aside
  • Displaces an Earlier Qualified Domestic Relations Order

Based on the updated Regulation:
A Superseding Domestic Relations Order shall not fail to be treated as a Qualified Domestic Relations Order solely (emphasis mine) because the order is issued after, or revises, another Domestic Relations Order or Qualified Domestic Relations Order.

Can a Superseding Domestic Relations Order increase or decrease the benefit awarded to an alternate payee in a prior Qualified Domestic Relations Order?

A Superseding Domestic Relations Order (which may be the second, third or nth) order does not fail to be treated as a QDRO solely because such order is issued after, and reduces the prior assignment contained in, said prior order. The result would be the same if the Superseding order were instead to increase the prior assignment contained in said order.

How will a Plan Administrator deal with a Subsequent domestic relations order between different alternate payees?

A Participant and Spouse “1” divorce. The QDRO allocates a
portion of Participant's 401(k) benefits to Spouse “1” as the alternate payee. Participant then marries Spouse “2”, and then they divorce. A second Domestic Relations Order is crafted pertaining to Spouse “2”. This second Domestic Relations Order assigns to Spouse “2” a portion of Participant's 401(k) benefits that had not already been allocated to Spouse “1”. This second Domestic Relations Order does not fail to be a Qualified Domestic Relations Order solely because this second order was issued after the initial order had been determined to be a QDRO.

This Practice Aid began with the query: What Constitutes Timely Filing?
Assuming the participant/retiree remains alive there does not appear to be a formal time limit for the filing of a Domestic Relations Order. However, there is another consideration, alluded to above that merits your attention. The cost to an alternate payee of any delay in filing the Order. Here, I mean significant delay. The reasons for the delay are not explored. What must be understood is the potential claim of an alternate payee that due to “delay” he or she has sustained significant economic loss. Consider the following illustration.
Sarah and Max Rabinowitz divorce on October 1, 2001. Sarah retires and begins collecting her pension on October 1, 2004. Had an Order been in place, Max would have received a monthly benefit of $975.00. Delay occurs and the Order is not Qualified until October 1, 2011. Beginning October 1, 2011 Max begins receiving a monthly benefit from Sarah’s plan in the amount of $975.00.

Max believes that this delay is not attributable to him. He believes this delay has caused him significant economic loss. An expert quantifies this loss at:
No interest imputed to loss: $81,900.00
Interest imputed at 4%: $94,336.00

We go no further with this illustration. Our aim is to alert the practitioner to the potential for client chagrin based on this type of delay. The Order against Sarah’s plan was Qualified after a delay of seven years. The illustration could have delayed the time for a greater period. Delay was the reason that Max did not receive his assigned benefits in a timely manner. Attorneys must recognize the danger inherent in delay. There are occasions when client memories are short and skewed. A result could be client dismay or worse.

A Preemption Issue.
W, is a participant in a 401(k) Plan. H waived his interest of $450,000.00 in W’s Plan in exchange for other assets. This waiver was memorialized in the Property Settlement Agreement which was incorporated into the Final Judgment of Dissolution of Marriage. The parties divorce. W, remarries H2 and dies two years later. H2 as the spouse of W applies for the full death benefit which has grown to $1,150,000.00. The Plan advises all interested parties that W, failed to remove H (first husband) as the full beneficiary on the employer provided beneficiary form. Who gets the $1,150,000.00? The spouse (H2) or H the former spouse?

Which instrument shall prevail?

  • The beneficiary designation on file with the Plan Administrator
  • The waiver in the Final Judgment of Dissolution of Marriage

This issue has been resolved by the U.S. Supreme Court (129 S. Ct. 865). The waiver incorporated into the Final Judgment of Dissolution of Marriage does not control. In every situation of this type of conflict between a state decree and an ERISA document, ERISA will preempt the state decree and control. The beneficiary designation which is an ERISA document determines who is the beneficiary. The full death benefit will be paid to W’s former husband.

When representing a participant in a matter involving any type of Defined Contribution Plan, it is suggested that the attorney for the participant formally advise his or her client of the necessity of conforming the plan beneficiary designation with the divorce settlement. Should the participant fail to make the beneficiary change, the letter herein suggested may serve to insulate the practitioner from any claim of failure to properly represent this client.


Federal Employees.
In matters involving a Federal Civil Service Employee it is useful to understand that the death or retirement of such employee effectively bars any assignment of a survivor annuity to a former spouse. See 5 CFR 838.806. The only exception to this rigid rule is an Order that is:

The first order dividing the marital property of the retiree and the former spouse

Thus, an amended Order, awarding a former spouse a survivor benefit that is made after the death or retirement of the federal employee will not be accepted. This leads to another question.

For Federal Civil Service Employees can a former spouse survivor annuity be inferred from the language of the Property Settlement Agreement or Final Judgment of Dissolution of Marriage? Again, see Files v. Exxon, 428 F.3d 478. Based on the C.F.R. Files is not applicable to the division of a Federal Employee’s pension. See the C.F.R. cited immediately below.

The clear language of 5 CFR 838.625 is controlling.

A separate, distinct award of a former spouse survivor annuity is necessary to award a former spouse a benefit that is payable after the death of the employee.

If the award of a survivor annuity is not separately and distinctly awarded to the former spouse in the original agreement then the Office of Personnel Management (OPM) will reject your Order. For Agreements involving federal employees, attorneys must take special care to confirm that appropriate survivor language appears in the first agreement dealing with employee benefits.

Special rules apply to the military. It is suggested that attorneys representing the non-military spouse consider the following items. Again, in the author’s opinion, Files v. Exxon cannot be applied.

Divorce subsequent to retirement.
If the member was married at retirement and his or her spouse waived Survivor Benefit Plan (SBP) coverage, then there is no authority to elect SBP coverage for this former spouse coverage after retirement.

When does Survivor Benefit Protection end for a spouse?
Spouse coverage under the SBP terminates on the date of divorce. Such termination of a divorced spouse's eligibility is automatic, even if the military (DFAS) is not advised of the divorce. Significantly: If for any reason the SBP was not addressed in the divorce and there is an attempt to remedy this oversight, be alert to the fact that failure to correct this oversight within one year of the date of the divorce ends “permanently” a former spouses opportunity to obtain SBP coverage.

Is notice to the military (DFAS) necessary when there is provision in the Final Judgment of Dissolution of Marriage assigning to a former spouse SBP benefits?
YES! Either the attorney or the former spouse must submit a "deemed election" request to DFAS, within one year of the date of the court order or agreement requiring the member to provide SBP coverage. Regardless of who submits this form it must be signed by the former spouse.

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