1. What is the most authoritative cite for including a loan in determining the AP's portion of a pension plan? (i.e. AP gets 50% of pension. Plan assets of P is made up of $50,000 loans, and $50,000 in mutual funds. AP gets $50K not $25K.)

2. May a QDRO call for the AP to get the benefit of an early retirement subsidy?

The amount to be provided to the alternate payee is the amount specified by the court order, as long as the plan administrator determines that the order is a QDRO. ERISA 206(d)(3).

If the court order does not specify which plan investments the alternate payee's share is to be drawn from, the plan administrator should look to its written procedure [required by ERISA 206(d)(3)(G)(ii)] to determine in which order plan investments (including the loan) should be used to raise cash at the time a payment to the alternate payee is required.

On your example, a lawyer who represents the alternate payee would take steps designed to get the alternate payee $50,000 in cash (redeemed from the mutual fund shares) while leaving the participant with the $50,000 loan receivable. Of course, the participant's lawyer might suggest a different view of things.

A plan administrator should stay out of it, limiting its role to (1) determining whether a court order properly presented to it is a QDRO, and (2) if an order is a QDRO implementing the exact provision of the order.



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The alternate payee cannot get the benefit of the early retirement subsidy unless the employee actually retires. Even though this point is expressly mentioned in the legislative history, it was recently litigated in California.

Can you give the cite for this California case?

Oddino v. Oddino, California Supreme Court in 1997.

Oddino v. Oddino, California Supreme Court in 1997.

Re: early retirement subsidy, please also see In re the Marriage of Lehman, 98 Daily Journal DAR 5539 ( May 28, 1998) - enhanced benefits were awarded.

A minor point to note is that a QDRO specifies what (% or $) is assigned to the alternate payee. It does not specify the benefit to the participant.