An arm of the U.S. Labor Department has completed work on a regulation that will affect payment of pension benefits to alternate payees.
The Employee Benefits Security Administration has published a final rule on the “time and order of issuance of domestic relations orders” today in the Federal Register.
The final rule, which will take effect Aug. 9, is a version of an interim final rule published on March 7, 2007, which was adopted to implement a QDRO provision in the Pension Protection Act of 2006.
The Employee Retirement Income Security Act normally prohibits creditors from getting at a pension plan participant’s plan benefits or assets.
In 1986, Congress added a section to the Internal Revenue Code, Section 414(p), that lets benefits to be assigned to an alternate payee through a QDRO, officials write in a preamble to the new final regulations.
Alternate payees could include a participant’s spouse, former spouse, child, or other dependent.
In the PPA QDRO provisions, Congress told the Labor secretary to make it a clear that a domestic relations order can meet the QDRO requirements no matter what time it was issued, and no matter whether it is issued after, or revises, another domestic relations order.
In March 2007. EBSA published the interimal final rule along with several exampls showing how the rule might work. The department received 24 comments, and most were favorable, officials write.
Some commenters asked for more examples, but EBSA officials worry that adding too many examples might lead the public to interpret the QDRO timing rules too narrowly, officials write.
Some commenters were concerned that one example included with the interim rule “could be interpreted as requiring a plan fiduciary to reject a posthumous order if the plan fiduciary was not given notice of that order before the death of the participant,” officials write. “The department does not agree with that interpretation of the example.”
The example “was intended to clarify that a domestic relations order will not fail to be a QDRO solely because it is issued after the death of a participant,” officials write. “The example dealt solely with the timing issue and its conclusion does not depend on the plan’s receipt of predeath notification of the domestic relations order.”