I have been asked to review a DRO which is the basis of a request by the AP for benefit payments from my client's defined benefit plan. The following are the facts as I know them:

Company receives a call from AP's lawyer in 7/2008 inquiring about AP beginning to receive a portion of her ex-husband's pension benefits. Company says there is no QDRO on file for Participant. AP's atty faxes to Company copy of DRO and cover letter from her file dated 9/1995 transmitting DRO to Company at an address that was not at that time (or at any time) the correct address for the Company's Plan Administrator.

The DRO contains the following language: "Copies of the Order shall be sent by ordinary mail to the [Company name] Pension Plan Adminstrator, who shall promptly notify the Participant and the Alternate Payee (whose addresses are listed below) of the receipt of a copy of this Order." No notification of receipt by the PA was sent to either party.

Several years ago, the Participant began recieving his benefits in the form of a single life annuity. The AP now wants to receive the benefits granted to her under the DRO. The benefit awarded under the DRO is supposed to be 50% of the Marital Share in the form of an annuity based on the Participant's life and that benefit is supposed to commence at the time benefits commence to the Participant (essentially a shared interest, it appears).

I am waiting on the Company to provide to me any information they have about what sort of QDRO guidelines and procedures they had in place in 1995 and provide me with a copy of the SPD in effect at that time. I am hoping that this may shed some light on what the AP's attorney knew at the time about the DRO approval process at the company.

I have read prior posts that have touched on some of the issues here - (1) the ability of the Company to get monies paid to the Participant back (demand repayment but, if must sue for these monies, must be able to track the funds OR offset future payments for some period to recoup past overpayments - is this permissible?); (2) the failure of the AP attorney to follow up on DRO submission - the system cannot work unless you assume that folks submitting DROs are aware enough of the process to know that a formal qualification must follow from the PA.

Is there an issue of constructive receipt of the DRO by the PA? If there were no quidelines or the SPD did not contain an address for the Plan (assuming the AP's attorney even looked at the SPD) did the AP's atty do the best she could?

My first inclination (which I, of course, kept to myself) was that the PA was justified in denying the AP any benefits because there is no QDRO (and there is the issue of laches, too). But, the Participant was well aware that under his divorce decree and under a DRO that he signed his ex was entitled to some portion of his pension.

If anyone has any advice about sending my client down a road other than relying on its records (no QDRO) and seeing what the AP does about it, I would welcome hearing it. If there is some larger issue that you think I might have missed, please feel free to chime in.

The plan administrator takes the QDRO under the current circumstances and applies it as well is it can, or determines that the order is not qualified if the terms cannot reasonably be applied to the benefit as it is now -- in pay status. I would not make any effort to apply the order other than propectively to payments yet to be made. Other than that, it is all a matter of judgment and interpretation, and within the authority of the plan administrator. The determination of qualification (if qualified) should describe the application of the QDRO terms and efect on each person. If the individuals object, then the dispute need to be resolved in an appropriate way, which might mean that a determination of qualification is reversed. Meanwhile, since the plan has received a domestic relations order, payments should be suspended to the extent required by law to preserve benefits that may be subject to a QDRO.

A related question that some BenefitsLink commenters might help with:

How much effort should a plan administrator put into satisfying itself that a writing presented as a domestic-relations order really is a court’s order?

I suspect that many plan administrators ordinarily don’t do much checking. But if there is a 13-year gap between the writing received and when it ought to have been received, perhaps a plan administrator may not presume regularity, and instead must take those steps that a prudent-expert fiduciary would take in the circumstances to consider whether the writing is a true copy of the court’s order.

Regardless of whether the participant knew about the DRO, benefits cannot be paid to the AP until (1) the dro is recieved by the plan and (2) the PA determines that the DRO is a QDRO. ERISA 206(d)(3)(G). I think the AP's lawyer is trying to set up a defense to a malpractice action by the AP because of his falilure to follow up on the dro request that he sent to the wrong address in 1993. He should have contacted the PA when he did not receive a response from the plan 6 months after submitting the DRO.

Without reviewing the dro it isnt even known that it would not be rejected for failure to comply with IRC 414p. Suspending the employee's pension while a review is conducted after he has retired could be considered a violation of his rights to a vested benefit since he has not returned to work as is required in order to suspend his benefits. It would be better for the PA to deny the AP's untimely submisson of the dro and leave it to the AP to file a lawsuit.

Since an AP is a beneficiary under ERISA, the AP would be subject to the S/l for filing a claim for benefits, i.e., the time allowed under the closest state law analogous to payment of benefits measured from the date the benefits commenced to the employee. If that time has expired the claim can be denied regardless of whether the dro fails to meet the requirements of 414p.

Edit: In any event I dont think that the plan can recoup any benefits paid before the DRO is received because at the time they were made they were not mistaken or over payments b/c the plan no notice of any adverse claim.

Thanks very much for your replies. I appreciate your time.