Does a distribution to an ex-spouse have to be made at the direction of a Qualified Domestic Relations Order, or can a distribution be made to an ex-spouse based on a Final Judgment of Dissolution of Marriage/Marital Settlement Agreement?

In the context of a governmental plan, the assignment and alienation rules do not apply, so in theory a plan could provide for division of benefits pursuant to a settlement agreement. However, if this were done, the agreement would not be a domestic relations order for federal tax purposes, so the employee (not the alternate payee) would be taxed on the distribution. As a practical matter, it has been my experience that either applicable state or local law or the plan document always requires a court order, rather than just a settlement agreement ratified by the parties. However, a Final Judgment of Dissolution of Marriage/Marital Settlement Agreement can be a domestic relations order if it is issued by a court or incorporated by reference into a court order (which would typically be the case).