3908 / Who is the employee's spouse or surviving spouse for purposes of the minimum distribution requirements? What is the effect of a QDRO?
For purposes of the minimum distribution requirements under IRC Section 401(a)(9), unless a Qualified Domestic Relations Order ("QDRO") is in effect (see below), an individual will be considered a spouse or surviving spouse of an employee if that individual is treated under applicable state law as the spouse or surviving spouse of the employee.
Planning Point: Since the federal Defense of Marriage Act was successfully challenged in front of the Supreme Court in the U.S. v. Windsor1 decision, same sex spouses have the same rights as opposite sex spouses for purposes of these rules. The 2022 proposed regulations update the definition of "spouse" to reflect these gender changes.
For purposes of the life expectancy rule applied after an employee's death, the spouse of the employee is determined as of the employee's date of death.2
If a portion of an employee's benefit is payable to a former spouse pursuant to a QDRO
( Q 3915), the former spouse will be treated as a spouse or surviving spouse, as the case may be, of the employee for purposes of the minimum distribution and minimum distribution incidental benefit requirements. This treatment applies even if the QDRO does not specifically provide that the former spouse is treated as the spouse for purposes of the rules governing qualified joint spousal annuities and qualified preretirement spousal annuities.3
If a QDRO provides that an employee's benefit is to be divided and a portion is to be allocated to an alternate payee, that portion will be treated as a separate account or as a segregated share for purposes of satisfying the minimum distribution requirements. For example, distributions from the account generally will satisfy IRC Section 401(a)(9) if required minimum distributions begin not later than the employee's required beginning date, using the rules for individual accounts.4
Planning Point: Note that while it is the employee's age that is relevant for determining RMDs for the separate account under a QDRO, the alternate payee (the employee's ex-spouse) has the option of rolling the amounts into an IRA in their own name. In this case, it is the ex-spouse's age that will be relevant to determining RMDs for the IRA (although any RMDs for the year-of-rollover must be taken before the rollover can occur).
A distribution of a separate account allocated to an alternate payee will satisfy the lifetime distribution requirements if the distribution begins no later than the employee's required beginning date ( Q 3895) and is made over the life or life expectancy of the payee.
Planning Point: Because of these rules, distributions to a child pursuant to a QDRO can be stretched out over a greater period than otherwise would be allowed under the minimum distribution rules to a spousal alternate payee.
Under the SECURE Act, the 10-year distribution period begins to run when the account owner's minor child reaches the age of majority. Under regulations proposed in 2022, a child will reach the age of majority upon reaching age 21. Defined benefit plans that treat a child as under the age of majority if the child has not completed a specified course of education and is under age 26 can continue to apply that definition.
If an alternate payee dies after distributions have begun but before the employee dies, distribution of the remaining portion of the benefit allocated to the alternate payee must be made in accordance with the lifetime distribution rules for individual accounts ( Q 3897) or annuity payouts ( Q 3896).5
If a QDRO provides that a portion of the employee's benefit is to be paid to an alternate payee but does not provide for the benefit to be divided, the alternate payee's portion will not be treated as a separate account (or segregated share) of the employee. Instead, the alternate payee's portion will be aggregated with any amount distributed to the employee and will be treated, for purposes of meeting the minimum distribution requirement, as if it had been distributed to the employee.6
A plan will not fail to satisfy IRC Section 401(a)(9) merely because it fails to distribute a required amount during the period in which the qualified status of a domestic relations order is being determined provided it does not extend beyond the 18-month period described in the IRC and ERISA. Any distributions delayed under this rule will be treated as though they had not been vested at the time distribution was required.7
1. U.S. v. Windsor, 570 U.S. 744, 133 S. Ct. 2675 (2013).
2. Treas. Reg. § 1.401(a)(9)-8, A-5.
3. Treas. Reg. § 1.401(a)(9)-8, A-6(a).
4. Treas. Reg. § 1.401(a)(9)-8, A-6(b)(1).
5. Treas. Reg. § 1.401(a)(9)-8, A-6(b)(2).
6. Treas. Reg. § 1.401(a)(9)-8, A-6(c).
7. Treas. Reg. § 1.401(a)(9)-8, A-7.