Tax Facts
3591 / How are domestic relations orders treated in conjunction with Section 457(b) “eligible” nonqualified deferred compensation plans?
The Qualified Domestic Relations Order (QDRO) rules applicable to qualified plans ( Q 3915) also apply to eligible Section 457 plans, so that the IRC Section 457(d) distribution rules are not violated if an eligible Section 457 plan makes a distribution to an alternate payee pursuant to a valid QDRO.1
Contrast this with a 457(f) “ineligible” plan where a DRO outlined by Section 409A regulations applies ( Q 3541). Although there are parallels, the DRO has significant differences from the QDRO that a QDRO is designed to act on escrowed “plan assets” of a qualified plan that do not and must not exist in the case of a 457(f) “ineligible” plan that is and must be unfunded and unsecured (even if placed in a Rabbi Trust).
Contrast this with a 457(f) “ineligible” plan where a DRO outlined by Section 409A regulations applies ( Q 3541). Although there are parallels, the DRO has significant differences from the QDRO that a QDRO is designed to act on escrowed “plan assets” of a qualified plan that do not and must not exist in the case of a 457(f) “ineligible” plan that is and must be unfunded and unsecured (even if placed in a Rabbi Trust).
Tax Facts Premium Tools
Calculators
100+ calculators specifically designed to help you easily assist clients with specific planning situations and calculations.
Practice Guidance
Designed to help you discover new ways for which to build and maintain client relationships.
Concepts Illustrated
Specifically designed to help you easily assist clients with specific planning situations and calculations.
Tax Facts Archives
Access to the entire library of Tax Facts dating back to 2012 allowing you to look up the exact tax figures from prior years.
Recently Updated Q&As