Tips for When the QDRO Process Is Held Up

Retirement plan sponsors and providers have processes in place for qualified domestic relations orders (DROs) that may be held up right now because the coronavirus pandemic has caused court closures.

There are requirements for a DRO to become qualified and some orders may include errors that will require corrections. If that is the case, there may be no other recourse than to wait until courts reopen to continue the process. For example, if the DRO requires a type or form of benefit not provided under the plan, such as a monthly payment when none is available in the plan terms, the DRO will have to be recrafted and re-approved by a court.

A blog post from law firm Morgan Lewis & Bockius LLP notes that many retirement plans require a certified copy of a DRO as part of the procedure for processing QDROs. “To address this issue, plans might consider adopting temporary procedures that allow for the continued qualification and processing of QDROs during these extraordinary circumstances without creating permanent exceptions to their normal QDRO procedures,” it says.

If a plan sponsor chooses to adhere to its QDRO procedures that require a certified order, payment of benefits to participants and alternate payees may be held up for an indeterminate period. This is why Morgan Lewis attorneys suggest a plan administrator might want to consider modifications to its QDRO procedures to allow for the continued qualification of DROs during the COVID-19 crisis, or in any situation when a certified copy is not available due to court closures or other extraordinary circumstances.

Two modifications the attorneys suggest are representations from the parties—the attorneys or the participant and alternate payee themselves—and an independent verification by the plan administrator. “Under the party verification approach, the plan administrator could consider accepting signed representations from the parties, under penalties of perjury, that the order being submitted is a true and correct copy of the final order filed by the court, that a certified copy is unavailable and that the circumstances make it impossible to submit the certified copy. Under the plan administrator verification approach, the plan administrator could access the court’s electronic filing system to confirm that the version of the order submitted by the parties is identical to the order filed by the court,” the blog post explains.

The attorneys add that the plan administrator could require that the parties submit a certified copy of the court order when it becomes available, but they note that the follow-up could be an administrative burden.