December 1, 2021

Volume XI, Number 335

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November 30, 2021

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November 29, 2021

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The GAO Reviews QDROs

In July 2020, the Government Accountability Office (GAO) prepared a report for the Ranking Member of the Senate Committee on Health, Education, Labor and Pensions about Qualified Domestic Relations Orders (QDROs). QDROs are court-issued orders that allow a divorced spouse (or in rare cases a child) to receive a portion of a participant’s qualified retirement plan benefit. A QDRO is one of the few ways in which a participant’s qualified retirement benefit can be assigned or alienated.

The report’s two key findings were to encourage the Department of Labor (DOL) to:

  • Find ways to collect data on the fees that defined contribution plans charge to participants or alternate payees for reviewing QDROs

  • Improve divorcing parties’ access to information about the QDRO process.

If you are a defined contribution plan sponsor, in light of the GAO’s report and recommendations it may be a good time to review the fee your plan charges for the review and processing of a QDRO (if any) to evaluate whether the fee is reasonable for the costs associated with the QDRO-qualification review. The GAO reports that typical fees for a QDRO review are between $300 and $600. Of the seven non-public large-plan sponsors that completed the GAO survey, five did not charge anything for a QDRO-qualification review and the other two charged $300 and $350, respectively. Keep in mind also that QDRO-related fees should be disclosed in the summary plan description for the plan, as well as in a plan’s participant fee disclosures.

Additionally, if your plan does not have a model QDRO document that can be provided to interested participants or potential alternate payees, you should work with your recordkeeper or legal counsel to prepare a model QDRO draft for your plan.

© 2021 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 317
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About this Author

Monica Novak employee benefit plans and executive compensation lawyer Faegre Drinker Biddle
Partner

Monica A. Novak assists clients with a range of employee benefits matters, including health and welfare benefits, tax-qualified retirement plans and nonqualified plans. She routinely counsels clients regarding the design, implementation and administration of benefit plans to ensure consistency with plan terms and compliance with the Internal Revenue Code and ERISA requirements, as well as the requirements under Health Care Reform.

Employee Benefits

Monica assists clients with the design, implementation and administration of employee...

415-591-7514
Mark P. Rosenfeld Employee Benefits Attorney Faegre Drinker Biddle & Reath Minneapolis, MN
Associate

An employee benefits lawyer, Mark Rosenfeld counsels employers, plan sponsors and administrators on the design, administration and governance of retirement plans (such as 401(k) plans) and welfare plans (such as health plans). He also drafts executive compensation arrangements, equity incentive plans and severance plans. Mark provides detailed analysis and advice on IRS Code § 280G golden parachute provisions in M&A transactions.

Retirement Plans

Mark works with plans sponsors and plan administrators to support the day-to-day operation of both ERISA tax-qualified plans...

612-766-8882
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