@camille22 wrote:
Thank you for your responses. Since it was a legal separation and not a divorce, the plan administrator would not follow the QDRO. They responded with
"Under Federal law, the administrator of the retirement plan that provides the benefits affected by an order is the individual (or entity) initially responsible for determining whether a domestic relations order is a QDRO. Plan administrators have specific responsibilities and duties with respect to determining whether a domestic relations order is a QDRO." Apparently legal separation is not recognized in many states.
I really want to do the right thing and if I do owe it, I'll have to figure out a way to pay it. I was in a bad situation at that time and was willing to do whatever it took to resolve the issue.
This is a bit peculiar. The IRS says that a QDRO is issued according to the state's domestic relations law. So yes, some states may issue a QDRO only for a final divorce, and some states may issue a QDRO for legal separation. But you said you had a QDRO? Or did I mis-read your statement.
This is what the IRS says,
A qualified domestic relations order (QDRO) is a judgment, decree, or court order (including an approved property settlement agreement) issued under a state's domestic relations law that:
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Recognizes someone other than a participant as having a right to receive benefits from a qualified retirement plan (such as most pension and profit-sharing plans) or a tax-sheltered annuity;
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Relates to payment of child support, alimony, or marital property rights to a spouse, former spouse, child, or other dependent of the participant; and
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Specifies certain information, including the amount or part of the participant's benefits to be paid to the participant's spouse, former spouse, child, or other dependent.
It's possible that you did not have a valid QDRO, or that the court order did not contain the necessary information. But it does not seem that the plan administrator (who probably administers plans from employers all across the country) has the authority to determine for themselves whether a particular state covers separations in their QDROs. Depending on your state law and the exact wording of the order (if you had one), you might have an argument that the plan trustee used the wrong code on the 1099-R form because they improperly refused to honor the order. So you really need to see a qualified tax specialist. Good luck.
