Academic journal article Journal of Accountancy

QDROs Made Simple

Academic journal article Journal of Accountancy

QDROs Made Simple

Article excerpt

The Pension Benefit Guaranty Corporation (PBGC) has issued Divorce Orders & PBGC, a booklet designed to help attorneys and others involved with pensions understand how to set up and apply qualified domestic relations orders (QDROs) when the PBGC becomes the trustee for a terminated pension plan. The 32-page guide contains instructions for creating QDROs as well as sample orders. "This guide is something every CPA should have if a client is going through a divorce," Greg Matthews, CPA, a principal in G. E. Matthews & Associates, Inc., St. Petersburg, Florida, told the Journal. "The CPA will find a useful discussion on QDROs that's a help to any divorce attorney; it's something he or she might want to pass along."

Matthews outlined a typical problem he hopes the booklet will solve: a nontax divorce attorney often drafts a QDRO to divide a pension to meet the marital separation agreement. After the court approves it, the order is sent to the plan administrator. Neither the lawyer nor the judge may be an authority in the labor and tax implications of a QDRO, so it is possible the order violates provisions of the Employee Retirement Income Security Act (ERISA). The administrator is then stuck between being held in contempt of the judge's order to execute the QDRO and creating a breach of fiduciary duty. …

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