Plan Administrator's Guide

Importance of Written QDRO Procedures | Receipt of an Executed QDRO
Timing Requirements for Determining Qualified Status of an Order
Segregation of Plan Benefits While QDRO Process Is Pending | When an Order Does Not Qualify as a QDRO
Once a QDRO is Qualified | What if the Participant Dies Before the Order is Qualified?
What Happens if the Alternate Payee Dies?

What Happens if the Alternate Payee Dies?

Under a defined contribution plan, many attorneys include a provision regarding the untimely demise of the alternate payee. The QDRO may provide that the alternate payee's share of the benefits is to be payable to her designated beneficiary or estate in the event of the alternate payee's death before receiving a distribution. This should generally be accepted by the plan administrator. However, if the alternate payee dies before a 401(k) plan QDRO was executed by the court, the alternate payee's share of the benefits should revert to the participant, unless the plan administrator would honor a nunc pro tunc QDRO that may be submitted after the alternate payee's death.

This issue becomes somewhat more complex under a defined benefit pension plan. Many QDROs attempt to provide ongoing benefits to the beneficiary or estate of an alternate payee in the event of her death. This is generally not permitted under a defined benefit pension plan. As a plan administrator, you would not like to absorb the costs associated with providing survivorship protection to the survivor of a survivor. Even absent a QDRO, a plan participant himself would not generally be entitled to designate a beneficiary or his estate to receive any death benefits in the event of his death before retirement. The plan may provide for spousal survivorship benefits to an eligible surviving spouse upon the participant's death, but certainly not to any other survivors or the participant's estate.