I just received a DRO (signed by the court!) naming the plan participant as the Alternate Payee. IRC section 414(p)(8) defines alternate payee "any spouse, former spouse, child or other dependent of the participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under a plan with respect to such participant." In my opinion, the participant is clearly not an alternate payee.

I been in the business 23 years and this is a first! Before I recommend to the plan sponsor to not qualify the order, I'd just thought I'd check and see if I'm missing any recent developments or anything. Am I? Thanks.

Is the participant the guardian of a child? If so the court may haved ordered payment to the participant for child support as the custodial parent. Courts sometime make DROs payable to a custodial parent for the benefit of a minor child or other dependent. You need to read the divorce decree and talk to the attorney who drafted the DRO.

Could this be an "end run", attempting to get a distribution from the plan when the participant is otherwise not eligible?

I believe that it is an "end run." The participant is facing significant financial difficulties and has tried other "methods" to get his money. Hardship is a possibility, but his defers aren't sufficient to cover his needs. I've called the attorney and will ask for a copy of the order. Has anyone else seen anything like this?

If the order is designed to provide for child support, I would insist that it name the child as alternate payee, but expressly provide for delivery to the participant as custodial parent. This is an unlikely arrangement under state law, but that is not for the plan administrator to decide. I suspect an improper attempt at distribution to the participant.

So what is this about asking for a copy of an order that you have already received?

I meant a copy of the divorce decree.

The plan administrator is asking for trouble by digging. The divorce decree is a domestic relations order, too. What are you going to do with inconsistent provisions? Are you going to ask for all documents that might be a domestic relations order, or just the divorce decree? Are you going to ask for other information that is not in court documents? Where do you stop and what are you going to do with all that dirt?

You started on exactly the right track -- a participant cannot be an alternate payee with respect to the participant's benefits. Is is for someone else to overcome your negative determination by clarification or additional information or orders. Don't try to do the work for that person.

Thanks! I will take your advice.