The GAO Reviews QDROs

In July 2020, the Government Accountability Office (GAO) prepared a report for the Ranking Member of the Senate Committee on Health, Education, Labor and Pensions about Qualified Domestic Relations Orders (QDROs). QDROs are court-issued orders that allow a divorced spouse (or in rare cases a child) to receive a portion of a participant’s qualified retirement plan benefit. A QDRO is one of the few ways in which a participant’s qualified retirement benefit can be assigned or alienated.

The report’s two key findings were to encourage the Department of Labor (DOL) to:

  • Find ways to collect data on the fees that defined contribution plans charge to participants or alternate payees for reviewing QDROs
  • Improve divorcing parties’ access to information about the QDRO process.

If you are a defined contribution plan sponsor, in light of the GAO’s report and recommendations it may be a good time to review the fee your plan charges for the review and processing of a QDRO (if any) to evaluate whether the fee is reasonable for the costs associated with the QDRO-qualification review. The GAO reports that typical fees for a QDRO review are between $300 and $600. Of the seven non-public large-plan sponsors that completed the GAO survey, five did not charge anything for a QDRO-qualification review and the other two charged $300 and $350, respectively. Keep in mind also that QDRO-related fees should be disclosed in the summary plan description for the plan, as well as in a plan’s participant fee disclosures.

Additionally, if your plan does not have a model QDRO document that can be provided to interested participants or potential alternate payees, you should work with your recordkeeper or legal counsel to prepare a model QDRO draft for your plan.

If you’d like help preparing a model QDRO document, please reach out to your Faegre Drinker benefits counsel.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

About Author: Monica Novak

Monica Novak counsels tax-exempt and for-profit clients on the complex and diverse array of statutes and regulations that apply to employee benefit plans and executive compensation arrangements. She provides guidance and support in designing compliant benefit programs, and assists clients with corrective actions when appropriate to ensure ongoing legal compliance. Monica also represents clients in negotiating stock and asset purchase agreements and merger agreements, resolving potential benefit plan liabilities and integrating benefit plans in the aftermath of acquisitions. View all posts by and

About Author: Mark Rosenfeld

An employee benefits lawyer, Mark Rosenfeld counsels employers, plan sponsors and administrators on the design, administration and governance of retirement plans (such as 401(k) plans) and welfare plans (such as health plans). He also drafts executive compensation arrangements, equity incentive plans and severance plans. Mark provides detailed analysis and advice on IRS Code § 280G golden parachute provisions in M&A transactions. View all posts by and

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