Spousal Rights Under ERISA Plans: Avoiding Loss of Benefits After Divorce, Ensuring Regulatory Compliance

Description

Retirement plans and other benefits tend to be the majority of assets of many individuals and are the most important aspects of divorce settlements or other actions impacting retirement accounts. Counsel must avoid mistakes in securing rights of non-participant spouses to prevent the loss of benefits. Plan administrators must ensure that plan documents and procedures are in accord with ERISA when enforcing any court orders impacting a plan participant’s benefits.

A divorce, separation or other proceeding may result in an order or decree that divides a participant’s retirement plan benefit between the participant and an alternate payee, such as a spouse, former spouse, child or other dependent. These QDROs or QMSCOs must meet requirements under ERISA to allow the plan administrator to divide the participant’s benefits. The prevalence of pitfalls and potential impact of errors forces practitioners to anticipate and avoid mistakes in drafting QDROs and QMSCOs.

Errors resulting in loss of benefits to the non-participant spouse include failing to recognize survivor benefit issues, failing to know the difference in dividing an ERISA plan vs. a federal government plan for a federal employee, and the lack of understanding the necessary requirements for employers and plan administrators to enforce court orders under ERISA. Plan administrators are required to pay benefits under any QDRO, and the plan must include written procedures for determining whether the order is a QDRO, and whether and how such benefits will be split.

Listen as our panel of experienced attorneys offers best practices for drafting and structuring QDROs and QMSCOs, key components in reviewing and approving them on behalf of benefit plan administrators, and methods in avoiding the most prevalent errors in the division of retirements accounts.