| Consider
the following:
In 1984 Harry and Shirley were working for a major communications
firm. In early 1985 the relationship flourished and they
began living together. In 1987 a child was a result of
their relationship. In 1989 a second child was born of
their relationship. The parties never married but continued
to live together until 1994. In 1994 Harry received a
promotion and was relocated to Europe. He remained in
Europe for several months and was then relocated by the
firm to another state. Upon Harry’s departure for
Europe all voluntary payments to support the children
ended. When Harry returned from Europe he continued to
ignore both Shirley and the two children born of their
relationship.
On February 1, 1995 Shirley was awarded monthly child
support by a court of competent jurisdiction, in the
amount of $200.00 for each child. Harry though prospering
in his new position did not honor this child support
Order. Moreover, Harry had married and was living far
from Shirley. By August 1, 2002 Harry’s arrearage
had grown to $36,000.00.
QUERY:
Is it possible to obtain a Domestic Relations
Order against Harry’s Pension Plan(s) with Jell
South Communications for the full amount of the child
support arrearage? Bear in mind the parties never married.
Troyan, Inc. maintains that the Retirement Equity Act is
not a bar to Shirley’s obtaining a Domestic Relations
Order against Harry’s Plan. Of interest is Trustees
of the Directors Guild of America v. Tise, et. al. 255
F.3d 661, 12/6/00. The statutory basis for the child
support Order begins at 29 U.S.C. §1056(d)(3)(B)(i)
which defines Domestic Relations Order. The key to drafting
Child Support Enforcement Orders is found at 29 U.S.C. §1056(d)(3)
(B)(i)(l), which reads:
(I) relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former
spouse, child, or other dependent of a participant, and...
(II) is made pursuant to a State domestic relations law
(including a community property law). 29 U.S.C. §1056(d)(3)
(B)(i)(ll)
It is emphasized herein that marriage is not a requirement
to obtain a Domestic Relations Order for child support.
What is necessary is an Order from a Family Court.
COMMENTARY:
Consider the broad application of this concept. When
discussion of this tactic does not soften the defaulting
parent make clear that ongoing arrearages are the foundation
upon which ongoing Enforcement Orders are built. These
Orders will be useful up to the point that 100% of the
Pension has been assigned to your client. Further, there
is no federal bar to interest on the arrearage. Thus
the actual loss of $36,000.00 would if default interest
is accrued at 6% amount to $55,730.96. If legal expenses
are added the actual amount in the Domestic Relations
Order could be greater.
There need not be a limit on the time for the creation
of these Orders. They will endure so long as the defaulting
individual fails to comply. If a post-compliance breach
occurs, then a new Order may be issued. This tactic is
especially potent tool against active plans as opposed
to a retired individual. The growing assets of active
plans are subject to assignment so long as it is necessary
to enforce Orders. Additionally, if the more liquid Qualified
Defined Contribution Plan has been fully assigned to
your client, Troyan, Inc. maintains that there is no bar
to then reaching the defaulting individual’s Defined
Benefit Plan. To assign the Qualified Defined Benefit
Plan Benefits of the Defaulting individual, Troyan, Inc.
creates a series of actuarial equivalents at various
interest rates so that the monthly benefit of the defaulting
parent is incrementally assigned to the other parent.
Appropriate enforcement language has also been crafted
by Troyan, Inc.. A further virtue of this tactic is that
there is no need to proceed in the current jurisdiction
of the defaulting parent to obtain this type of relief.
Relief will be obtained in the state issuing the original
Order. Since the resulting Domestic Relations Order is
national in reach, an ERISA Florida Child Support arrearage
Order is recognized against an ERISA Plan in Alaska.
Strategies:
It is suggested that the first target of this remedy
be the defaulting individual’s ERISA Qualified
Defined Contribution Plan. It is observed that although
plans have a minimum distribution age of 50, this age
requirement is often waived if the reason for the distribution
is a Qualified Domestic Relations Order. Troyan, Inc. will
advise you of the earliest date a distribution to an
Alternate Payee can be made pursuant to an arrearage
Qualified Domestic Relations Order. When a Qualified
Defined Contribution Plan is not available, the Qualified
Defined Benefit Plan may be the target. This will not
generally produce an immediate distribution to your client,
however, as the defaulting parent sees his entire pension
being eroded, it is likely that the arrearage will be
satisfied. Domestic Relations Orders against Qualified
Defined Benefit Plans are a bit more complex as they
require conversion of current dollars into monthly benefits.
Further, to bar loss of entitlement it is necessary to
award your client survivor benefits in an amount equal
to the arrearage. Again the necessary actuarial calculations
are performed by Troyan, Inc..
Alert:
The true Alternate Payee in this discussion is the child/children.
Since, minor children cannot represent their own legal
interests, we have found no difficulty in making your
client the Alternate Payee. We mention this so that you
are prepared should the Plan Administrator raise this
point.
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