This area is complex. It involves both federal and state law as well as legal and financial analysis. There are two general types of orders – those that are controlled by the Employee Retirement Income Security Act (ERISA) and a special group (mostly government retirement plans) that are not covered by this federal law. There are three federal agencies that provide interpretation of rules and guidance under ERISA.

Note that the plan’s administrator makes the first decision. The decision on whether a specific order “qualifies” under ERISA (the federal law that established QDROs) cannot be appealed to a state court judge. ERISA provides that an alternate payee under a QDRO can enforce rights against a plan and its fiduciaries in federal court. (ERISA §§206(d)(3)(j) & 502(a)). The federal Department of Labor takes the position that decisions on whether a plan is “qualified” under ERISA must be made in a federal court. In other words, if the plan administrator decides that an order does not meet the ERISA standards for “qualified,” the appeal must be made in federal (not Maryland) court.

Federal Law – There are two primary federal statutes that define and govern “Qualified Domestic Relations Orders”.

• The Internal Revenue Code (I.R.C.) prescribes rules with which retirement plans must comply (I.R.C. §41(a)). The Code also governs tax consequences of contributions and distributions from plans. I.R.C. “anti-alienation” provisions protect benefits from attachment or invasion until the plan participant is paid. QDROs are qualified exceptions to the “anti-alienation” provisions and were added as part of ERISA to the Retirement Equity Act of 1984 (Pub. L. No. 98-397, §204(a) (8/23/84))
• ERISA, the Employee Retirement Income Security Act of 1974, was enacted, in part, to protect the interests of participants (i.e., employees) in private pension plans and their beneficiaries. If a plan is a QDRO plan, the provisions of the federal QDRO rules must be incorporated into the court order.

Maryland Law - In Maryland, interest in a pension may be transferred after the court determines which property are marital property and the value of the marital property. To enforce an award and judgment in a property disposition proceeding, the underlying order must comply with QDRO provisions if the pension plan is set up as a QDRO. While the division of marital property is generally a matter of state domestic relations law, the assignment of pensions, in most cases, must also follow Federal law via a “qualified domestic relations order” or “QDRO.”

To locate parts of the Maryland code dealing with pension division (Md. Family Law Code Annotated §8-205), you can use an online version of the code through Lexis-Nexis; (click the “+” next to Maryland Code to see a list of titles)

Pension Plan Documents and Administrators - The documentation for the individual retirement plans contains the terms regarding who can benefit under a plan. The administrator for the plan is the person who makes the decision about whether a particular domestic relations Order is acceptable.

U.S. Department of Labor (DoL) The U.S. Department of Labor is the federal agency charged with enforcing compliance with ERISA and providing implementation guidance to plan administrators, employers, plan participants, beneficiaries, and domestic relations attorneys and specialists. The website contains several documents of special interest to Maryland attorneys.

• QDROs – The Division of Pensions Through Qualified Domestic Relations Orders – an 18-page booklet with clear guidance and legal citation.
• Advisory Opinion Letters – DoL issues advisory opinions at the request of plan administrators and others.
• Drafting a Qualified QDRO – Discussion and sample language from DoL and the Internal Revenue Service.
• Frequently Asked Questions about Pension Plans and ERISA – includes information on the federal agencies that regulate pension plans.
• Frequently Asked Questions about Qualified Domestic Relations Orders

Internal Revenue Service (IRS) – IRS is responsible for ensuring compliance with the Internal Revenue Code and establishes rules for operating a tax-qualified pension plan.

• Toll-free taxpayer assistance line for employee plans - 877-829-5500
• Sample QDRO language - IRS Bulletin 96 TNT 253-11, Notice 97-11.
• QDRO Tax Rules – see IRA publication 575 “Pension and Annuity income.” Pension benefits are taxable when they are paid to the participant or, in some cases, to the alternate payee.
• Form 1099-R for reporting distributions to an alternate payee.

Pension Benefit Guaranty Corporation(”PBGC”) – Nonprofit, federally-created corporation that guarantees payment if certain pension benefits under defined benefit plans that are terminated without sufficient funds to pay benefits. PBGC provides general information to attorneys and other professionals on QDROs that are submitted to PBGC after PBGC becomes trustee of a terminated pension plan.

• Contact Information: 1200 K Street, NW, Washington, DC 20005-4026
  Phone: 202-326-4000
  Toll-Free: 800-400-7242
• Divorce Orders and PBGC - 25-page booklet that includes extensive model QDROs, instructions, procedures, checklist and a glossary.
• Comments by a private attorney on the utility and impact of the PBGC booklet.
• PBGC also provides Model QDROs

National Resources

The National Pension Lawyers Network (NPLN) - is a no-cost referral service that connects workers and retirees with professionals who can help them understand and enforce their pension rights. 

• Contact Information:
  National Pension Lawyers Network
  Gerontology Institute, University of Massachusetts Boston
  100 Morrissey Boulevard, Boston, Mass. 02125-3393
  Phone: (617) 287-7332
  Fax: (617) 287-7080
  E-mail: npln@umb.edu

American Academy of Actuaries - The Pension Assistance List (PAL) is an American Academy of Actuaries program that serves the public. It is intended to provide professional services to consumers who have questions about their pension plans.

• Contact information:
  American Academy of Actuaries
  1100 Seventeenth Street NW,
  Seventh Floor, Washington, DC 20036
  Phone: 202.223.8196,
  fax 202.872.1948
  E-mail: shelton@actuary.org

The Pension Rights Center (PRC) - Offers a list of resources and organizations that are available to assist consumers with a variety of pension issues. If none of these resources are able to help, consumers may also contact the center via e-mail at pensionhelp@pensionrights.org. Those seeking assistance must include in their e-mail their name, city and state, phone number, a brief description of their situation, and where else they have sought help.

Source: Maryland State Law Library                                                                           Last date of legal review: 01/22/08 (PLL/M.A.J.)