· ~ .~ . ~ .. 

PBGC · · Protec:;ting America~s Pen·sions 

Pension .Benefit Guaranty Corporation 

1200 K Street, N.W., Washington, D.C. 20005-4026 

September 27, 2017 

Re; · ·Rema1~d Number- ; Case No. 209040; The- Company ·Pension Plan and · 

Trust (the "Plan") 

Dear Mr. - : 

. This Appeals Board decision constitutes PBGC~ cy action regarding your request 

that PBGC qualify a domestic relations order dated--2012 (the "2012 DR0"). 1 '.fhe 

2012 DRO seeks to replace a 2008 domystic relations order qualified by PBGC (the. "2008 

QDR0").

2 

As you aJe aware, on- 2017, the United Sta~es District Court· for the District of 

Columbia (the "District Court") issued a Memorandum Opinion and Order vacating the Appeals 

Board's December 28, 2012 decision not to qualify the 2012 DRO and remanding this matter to 

PBGC.3 . 

The District Court instructed PBGC to conduct . further proceedings consistent with its . 

Qpinion.

4 Consisterit with the District Court's guidance, this Board decision is based on an 

analysis of relevant provisions of the Employee Retirement Income Security. Act of. 1974, as 

amended ("ERJSA"), U.S. Department of Labor ("DOL") and PBGC regulations,·and caselaw. · . ( · 

.This decision supersedes the Appeals Board's December 28, ~012 decision . . 

1 See Enclosure 1. 

· 2 See Enclosure 2. 

3

.See December ~8, 2012 Appeals Board decision, at Enclosure 3.· United States District Judge 

issued · hi.s Memorandum Opinion and Order on 2017, after you (the "Plaintiff') ·and PBGC (the 

"Defendant") had filed separate Summary Judgment motions in v. PBGC, -Civil Action No. -

- (CRC). See 2017 Memorandum Opinion and Order issued by Judge - at Enclosures 4 and 5, 

respectively. . · · 

• 

4 See·Meniorandum Opinion, at Enclosure 4,. 
( 

Summary .of This September 27, 2017 App~als Bo~;d·D~cision 

. . 

As fully explained in this decision, the Appeals Board finds that. the 2012 DRO cannot be 

_qualified pursuant to ERISA -section 206(d)(3)(D)(i), because the 20l2 ORO.requires the Plan 

(now PBGC, as trust~e fto proviqe a type or 'form. of benefit, or an option; that is not otherwise 

available μnder the Plan or permitted by·:ooL arid PBGC regulations,. Thus, the 2,012 DRO does 

not meet the requirements set forth in s~ction 206( d)(3)(D)(i) of ERIS A. - . . 

We also explain in this decision.that PBGC' may qualify a DRO that removes the surviving 

spouse rights from the remaining benefit due to you undei· the Plan, if the qualification occurs prior 

to your _benefit commencement date. 1 

Backgr<J'und. 

PBGC prqvides pension insurance in accordance with ERISA. If a plan sponsor of a tax-

. qualified d~fined benefit pension plan is ·unable to support its plan, PBGC becomes trustee of the 

plan and pays benefits pursuant to the terms of the plan, subject to limitations and requirements 

under ERISA. 

The Plan terminated On· January 31, 2002, without sufficient assets to provide all benefits. 

PBGC guarantees under ERISA, ·and PBGC subsequently became t_rustee of the Plan. · the terms 

of the Plan, the provisions of ERJSA, PBGC's regulations and policies, and the terms of.any 

applicable qualified domestic relations order· ("QDRO") determine the benefits that PBGC can 

pay. 

When PBGC becomes trustee of a terminated . plan, PBGC collects participant data and 

documents from the former plan administrator. PB.GC then. audits that information. PBGC relies 

on the information it receives from a (ormer plan administrator u.riless PBGC's audit of that 

information shows that. it is incorrect, or a participant supplies PBGC with documents showing 

.that the. information is·incorr~ct. ' 

Following the· P~an's termination and PBGC's trusteeship of the Plan, PBGC has been 

responsible for determining the validity (i.e,, qualification) of domestic relation~·orders. 

The Divorce Decree. 

On __ 1.995, Judge · · · S~ate ofMinnesota, -

~ d "Findings· of Fact, Conclusions of Law, Order for Judgement, & ~udgment & 

Decree" (the "Divorce Decree"). 5 Among other things, the Divorce Detree provides -

- (now known' as with an entitiement to a portion of your retirement 

benefits. Specifically, "Petitioner [Ms. - · is awarded one-half of any retirement or 

pension benefits to which Respondent [Mr.'- is entitled from his previous employers.- ... "6 

5 See Enclosure 6. You and Ms. had been married since 1973.· 

6 See page 6 of Divorce Decree, at Enclosure 6: 

2 
The 2008-0DRO 

On - 2008, a separate interest domestic relati~ns order, naming you as the Participant 

and Ms.- as the Altemate·Payee, was submitted to PBGC for qualification.7 Pursuant to 

. Section 3 ~f the do1nestic relations order, "PBGC · shalf pay the Al temate Payee as a separate 

interest an amount actuarially equivalent to one-half of the Participant's benefit under the Plan. 

The Participant's benefit shall be determined as of the date the alternate payee elects to begin 

receiying benefits from the. [P]lan."8 · · 

. . . ' 

Pursuant to Section 6 of the domestic relations order, "PBGC shall pay the Alternate's [sic] 

Payee's. benefit in the form elected by the Alternate Payee on the PBGC benefit application." . 

· Section 7 of the domestic rela.tions order provides that "PBGC shall stop payments of the Alternate 

Payee's sep,'\rate interest in accordance with the form of benefit elected by the Alternate Payee." 

Section 8 ·of the domestic relations order provides that "[t]he Participant's death shall not affect 

payments unde1: the Alternate Payee's separate interest." 

Section- 10 of.the domestic ·relations order, Surviving Spouse Rights of Alternate Payee, 

provides: 

a . . PBGC shall treat the Alternate Payee as the Participant'.s spouse . . . for 

purposes of the Participant's qualified joint-and-survivor annuity resulting from 

the benefit in which the Participant retains a separate interest. .. . 

b. PBGC shall treat the Alternate Payee as . .the Participant's ·spouse for the ·. · 

purpos~s of the Paiiicipant's quaiified preretirement survivor annuity resulting 

frotn the benefit in which the Participant retains a separate interest. ... 

On August 28, 2008, ·PBGC determined that the domestic .r:elations order is a Qualified 

Domestic Relations Order (the "2008 QDR0").9 Neither you nor Ms. - appealed this 

determination; which became effective under PBGC regulations after the 45-day appeal period had 

elapsed. 10 · 

. Ms. Commencement of Her Separate Interest Benefit and 

Yo.ur Request for a Benefit Application · 

. ' . . . . . 

OnJuly 27, 2009, Ms: - elected to begin her separate interest beq_efit in the form of 

a Str~ Annuity wi~h_No Survivor Benefits ("SLA"). ~ffective October 1, 2009,at age 65,. 

Ms. --began rece1vmg a monthly benefit of $235.79 m the form of an SLA. Pursuant to 

the te~s of the 2008 QDRO, Ms: - monthly benefit, as an BLA, is ·payable for her 

lifetime. your de.ath will have no effect on her sep.arate interest benefit. 

7 See Enclosure 2. 

s Id. 

9 See Enclosure 7. 

10 See 29 Code ofFederal Regulations ("C.F.R.") section 4003:22. 

3 

; 
.. On August 23, 2017, you requested a \Benefit Application from PBGC (PBGC Fonn 700). 11 

As of the date of this decision, you are 77 years old, Ms.- is 73 years old, and you hav.e 

· n_ot commenced receipt of your PBGC-payable monthly benefit payments. 12 · 

PBGC Erred in Its 2011 Review o{Yo_ur Draft DRO 

. . 

On July 1, 2011, PBGC acknowledged -receipt ofa di"aft domestic· relations order submitted 

. by you for review. 13 _The draft domes.tic .relations order is identical to the 2012 DRO.· In an 

August 5, 2011 letter, a PBGC repres·entative info1med you that, based on PBGC's informal 

review, the draft domestic relations order, if submitted to PBGC unchanged as an original signed 

order, would be a qualified domestic relations 01:der.1.4 PBGC erred iri reaching tpis conclusion, 

and we ~egret this mistake in PBGC's 2011 review of the draft domestic relations order. . 

The 2012 Minnesota Court Order and the 2012 DRO 

. Prior to s1gning the 2012 ORO, Judge State of 

Minnesota, signed ari Order on- , 2012, regarding your case . . The · 

Order states that ''the Respondent [Mr. - moves the Court to· sign a QDRO that he prepared 

which eliminates the joint survival provision."15 Specifically, the , 2012 Order 

provides that "[t]he Respondent shall submit a QDRO for the Court's signature which removes the 

joint survival provision in the prior QDRO filed - 2008 ; ... No other changes are .to be 

made, and the QDRO submitted by the Respondent must still provide for a 50-50 division in the 

benefits between the parties." 16 · 

On 2012 (three days ·later:), Judge llllsigned the 2012 DR0. 17 Pursuant_ to 

section 2 of the 2012 DRO, the pension benefit assigned to Ms.- provides herw1th "50% 

[x] Participant's Benefit as specifiyd iri the divorce decree." Section 3 of the 2012 DRO, Payment 

of the Alternate Payee 's Benefit, provides the following: 

The Plan (Trustee) [PBGC] is directed to pay the Alternate Payee each month an . 

amount, as indicated in Section 2. The payment shall begin _as soon as · 

administratively [pbssible] and will termiriate upon- the earlier of either party's 

death. If the Alternate Payee predeceases the Participant, the Alternate Payee's 

11 'in response to your request for a .Benefit Appli.cation, PBGC informed you, in a letter dated September I 1, 2017, 

that once the Appeal's Board has reached a decision, PBGC ~ili'calculate your benefit and is?ue an_application to you . 

. See your August 23, 2017. letter and PBGC's September 11, 2017 letter, at Enclosure 8. 

12 The Appeals Board has no .authority to opine on the applicability of the requin,d minimum distribution provisions 

in Internal Revenue Code ("Code") section 40l(a)(9) or penalties associated with failing to commeqce benefit 

payments upon reaching the required minimum distribution date. 

13 See Enclosure 9. 

14 See Enclosure 10. 

15 See -Enclosure I I . 

16 Id. 

17 See Enclosure I. 

4 
benefit will revert back to the Participant effective the month following the 

Alternate Payee's death. 

The 2Q 1.2 DRO seeks to: change the separate interest benefit Ms. - was awarded (and is 

receiving) .pursuant to the 2008 QDRO, replace the separate interest form of benefit in the 2008 

QDRO with a shared payment benefit,· and remove.Ms. urvivor interest from your 

· remaining benefit. 

Despite the statemei1t in the , 2012 Order that no . change~ other than the 

elimination of the "joint survival provision" 18 be made to a: domestic relations order submitted for· 

·her approval, Judge signed the 2012 DRO. 

PBGC's Review o(the 2012 DRO 

You submitted the 2012 DRO to PBGC foi qualification in February 2012. On May 25, 2012, 

PBGC determined that the 2012 DRO is not a Ql)RO for the following reason: 19 · 

The [2012] Order is a "shared payment" order - an order that gives the alternate 

payee a portion of the participant's benefit payments under the .plan during the 

participant's lifetime. The alternate payee began receiving benefits before the 

· Qrder was submitted under the terms. of a previously qualified "separate interest'.' 

ordc?r. Once an alternate payee and/or participant·begins receiving benefits under a 

"separate interest" order, the benefits are to be payable for their life expectancy. 

Because ,the Order requires that the alternate payee's benefit be payable for only 

the participant's lifetime, PBGC. would nqt qualify the Order. PBGC may, 

however, qualify an amended "separate interest" order. 

Your Appeal and the Appeals Board's 2012 Decision 

You appealed PBGC's May 25, 2012 determination on July 9, 2012. The Appeals Board 

denied your appeal on December 28, 2012 (the "201~ becision").,2° For the reasons explained in 

the 2012 Decision, the·Appeals Board found that yqur appeal did not provide a sufficient basis for 

changing PBGC's determination that PBGC cannot qualify the 2012 DRO. 

in the 2012 Decision, the Appeals Board addressed the circumstances under which PBGC 

may qualify a subsequent DRO: 

Because you have not yet started receiving your benefit, a new amended:orde~ could 

· change Section 10 of the 2008 QDRO ... to state that the Alternate Payee will not 

be treated ·as your su.rviving spouse for purposes of (1) the Qualified Joint and 

18 We believe Judge meanf the "joint and survivor provision." There is no such term in ERISA as a "joint . 

survival" benefit. 

19 S~e Enclosure I 2. 

20 See Enclosure 3. 

5 
Survivor Annuity; and (2) the Qualified Preretirement Survivor Annuity without 

violating ER1SA's QDRO requirements. 

(Emphasis in Original.) 

The U. S District Court Order and Me~1orandum Opinion . 

In December 2014, you sued PBGC, seeking review of the Appeals Board's 2012 Decision. . ~ . . . . 

. · On- 2017, Judge United States District Court for the District 

of Columbia, vacated the Appeals Board's December 28, 2012 decision that the 2012 DRO does 

not constitute a QDRO, and remanded the matter to PBGC. The District Court Order directed 

.. PBGC to· further-consider your i·equest that PBGC qualify th; 2012 DR0.21 In the Memoi·andu·m 

Opinion, the District Court found that the Appeals Board erred· in its ·reliance on PBGC Operating 

Policy Manual 6.6-3, Qualified Domestic Relations Orders.22 Specifically, the Court stated the 

following: 23 · 

The (Appeals] Board's reliance on the PBGC's "already in pay status" policy to 

affirm the Agency's decision suffers from two related problems .. First, [United 

States Code ("U.S.C.")] § 1056(d)(3)(D)(ii) [section 206(d)(3)(D)(ii) of ERISAJ 

excludes from qualification only those domestic relations orders that require the 

payment of increased benefits. That condition necessarily implies that Congress 

intende~ for the agency to make some type of determination as to whether a specific 

order will (or, more accurately, is likely to) increase overall benefits payments. Yet 

the agency's st~ted policy relieves it of that statutory responsibility by 

automatically disqualifying any order submitted to the PBGC after the alternate 

payee begins receiving payment under a separate-interest order. See PBGC 

Operating Policy Manual [6.6-3(F)(2)(d)]. ... · There is nothing inherent in -an 

alternate payee's receipt of benefits under a separate-interest order that would cause, 

a subsequent shared-interest order to require an increase in benefit payments. , .. . . 

A related flaw in PBGC policy (and the Appeal Board's reliance on it) is that the 

·statute-tells the agency precisely how to determine whether a subsequent order will 

requite the plan to pay incre~sed benefits: "on the basis of actuarial value." 29. · · 

U.S.C. § 1056(d)(3)(D)(ii). Yet the policy, as applied by the Appeals Board here, 

rejects all subsequent o~ders if the alternate payee has already beguh to receive ·. 

· payments, without regard to actuarial value .... . PBGC does not con~ider "actuarial . 

. value" when assessing whether a new form of benefit will result in increased 

payments relative to a prior one, as Congre~s instructed; rather, it ignores that factor. 

. , ... altogether and simply assumes that the mere potential for increased qenefits is 

· enough to keep a qoi:nestic relations order from being qualified. Because· that 

policy, and thus the Appeals Bo~rd decision, disreg~rds c1 basis of comparison· 

21 See Enclosure 5. 

22 See Enclosure i3 . 

. . . . 23 See Enclosure 4. 

6 
•. 

required by Congress, i_t is both ai'bitrary a1id. caphcious, and contrary to the 

agencl s statutory mandate . . 

(Emphasis in Original.) 

Th~ Appeals.Board has reviewed the 2012 DRO, consistent with the District Court Order and 

Memorandum Opinion. · · · 

· The Appeals Board's Correspondence with You 

An ·April 3, 2017 Jetter from William F. Condron, Jr., Manager of the Appeals Division, 

informed ·you th_at the Appeals Board will issue a decision based on the administrative record and . 

· consistent with the · District · Court's guidance , no later than September 30, 2017.24 Fm·· 

administrative conv.enience, the Board docketed your case as ~emand Number . 

On June 13, 2_017, you faxed a letter to PBGC's General Counsel, Judith R. Starr, challenging 

the standing of the Appeals Board to review the 2012 QDRO pursuant to the District Court Order.25 

Ms. Starr reviewed your request and asked Mr. Condron to respond directly to you: In his June 14, 

2017 letter to you, Mr. Condron informed you that "[t)he remand of your case by the U.S. District 

Court will be handled by th; PBGC Appeals Board, as explained in my April 3, 2017 letter to 

you."26 . . . . 

The Appeals Board's Notification to.Ms. ~ f. · 

the Review o(the 2012 DRO · 

. Pursu·ant to PBGC's reg·ulation, at 29 C.F.R. section 4003.57, the Appeal~ Board notified Ms. 

- ·by letter·dated May 9, 2017, that the District Co~rt had vacated the Appeals Boarfs 

December 28, 2012 decision that the 2012 DRO does not constitute a QDRO and had remanded 

the matter to PBGC. 

27 The May 9, 2017 'letter also· explained that if the Appeals Board were to 

decide fo qualify t_he 2012 PRO, such decision would be PBGC's final agency action and could 1

affect Ms. - PBGC-payable benefit under the 2008 QDRO, .as well as her entitlement 

to a surviving spouse benefit provided under the·2008 QDRO. Ms. - was given 45 days 

. from May~' 2017 to.submit any written comn~ents.28 -

. The Appeals Board provided you a copy of its May 9, 2017 letter to Ms. -

. On-June 6, 2017, Ms. attorney, . submitted a written response 

on Ms·. - behalf. Ms.- response stated the following? in large part:29 

24 See £~closure 14. 

2s See, Enclosure 15. Pursuant to 29 -C.F.R. sections 4003.51 through 4003.61, the Appeals Board is authorized to 

review this· matter. 

26 See Enclosure 16. 

27 See Enclosure 17. : 

28 See 29 C.F.R. section 4003.59(b). 

29 See Enclosure 18. 

7 
/ 

First of all, my office was the attorney of record for Ms. - in 2012 when 

Mr. - received a Default J~dgment against Ms. in order to modify 

her Qualified Domestic Relations Order. My office did not receive notice of that 

proceeding as Mr. - was required to do .. I am discussing with my client and . 

she is considering bringing a Motion back before the: [Minnesota] Court in order to . 

vacate that Order. However, I understan~ that the .Board has been provided with 

an Order from-the [District] Court, which the Board must now consider. I 

I 

The 2012 Order from Jud.ge llllprovides that Mr. - can.have the joint 

survi-yal provision. eliminated from his previous Qualified Domestic Relations 

. Order. That Order does not allow Mr.- to inodify my client's inter.est from a 

separate payment interest into a shared pay111ent interest: If that is ~h_at is required . 

by _PBGC in order to eliminate the joint survival provision and to find the DRO is 

qualifie~, then ·my ~ ects:to that taking place and she asks that the Board · 

doesn't accept Mr. 11111111112012 Domestic Relations Order. My client does not 

want her benefit to change. IfMr.- wishe~ to modify the DomesticRelations 

Order from a separate payment interest into a shared payment interest, then he 

needs to take that matter back before Judge lllll, properly serve notice upon~ · 

client through her respective counsel, and have that matter heard before Judge -

in order to receive an order in conformity with his wishes. At that time, P[B]GC 

.could be presented with any new Order that may be issued by the Court related to 

modifying my client's separate payment interest. 

Ms. - enclosed with her letter. a.r1affidavit signed by.Ms. - objecting to any 

. changes. to her benefits. Ms. - also asked the Board not to gulilify the 2012 Order . 

. Ms.- pro~ided you a copy of her June 6, 2017 letter to the Appeals Board. 

Legal Background 

The Terms of the Plan 

SectioriA.01 o·f the Pl~, Normal Retirement Benefit Form, provides the foUowing: 30 · 

The Normal Retirement Benefit to be provided for every participant under the plan· 

shall be a monthly pension commencing at Normal Retirement Date in the form of 

a Straight L,ife Annuity. · 

Section 4.02 of the ~lan explains the method of computing benefits. Sections 4.03 and 4.04 

· of the Plan describe limitations on benefits. Sections 4.05, 4.06, · and 4.07 of the Plan addre_ss 

. retirement on· a deferred retirement date, retirement on an early retirement date,· and disability 

. retirement; respectively. 

· · Section 4.08 of the.P_lan, Automatic Joint and Survivor Option, provides the following: ( . 

30 See Endos:ure 19. 

8 
Unless the participant (after having received a written explanation of the te~ms and 

conditions of_ a Qualified Joint and Survivor Arumity and the effect of an election 

·hereunder) subject to Committee consent elects in .writing to receive the Normal 

Retirement Benefit in one of the Optional Settlements of actuarially equivalent 

value under Section 4.09; if he i.s within ten (10) years ofhis Normal Retirement 

Age and has been married for the one year period ending on his Early, Normal, or 

Deferred .Retirement. Date his benefit shall be in the form of a reduced Qualified 

Joint and Survivor Annuity, payable during the joint lives of the participant and his 

spouse, in an amcmnt actuarially equivalent to the participant's Normal Retirement' . 

Benefit accrued to date with at least 50% bnt not more than LOO% of such reduced · 

retirement b·enefit continued to t.he surviving spouse. The participant' may elecrnot 

to receive the Joint and Survivor Annuity or he may revoke or reelect the Join{ and 

Survivor Annuity [at] any time prior to the end of the election period. The election 

. or revocation pedod not to receive a Joint and Survivor Annuity·inay not end until 

the later of the 90th day prior to the commencement of benefits or the 90th day 

following the date applicable lnformation has been furnished to the participant. In 

no event may the election or revocation period [ extend] beyond the benefit 

commencement date .and in every case it must be of at leqst 90 days in duration. 

Under Section 4.09 of the Pl~n,. a participant may elect an optional form of benefit, if certain 

~onditions are met. .· 

\ 

The terms of the Plan do not provide an option for an.individual to commence a benefit in one 

form and later stop that benefit and restart ( or reannuitiie) the benefit in a different fo.rm. 

The Plan document does not address domestic relations orders, despite the requirement in 

section 206(d)(3)(A) of.ERJSA that "[e]ach pension plan shall provide.for the payment of benefits 

in accordance with the applicable requirements of any qualified domestic relations order." t • • • • 

However, the Plan's Summary Plan Description ("SPD") provides the following text concerning 

domestic relations orders:31 · · · 

As a general rule, your interest in your Accrued Benefit, including your "vested 

interest," may not be alienated. This means that y·our interest .may not be sold; used 

as collateral for ·a loan, given away or .o(herwise transfened. In addition, your 

creditors may not attach, garnish or otherwise interfere with your Accrued Benefit. 

. There is an· exception, however, to this general rule. The Administrator may be 

required by law to recognize obligations you jncur as a result of court ordered child 

support or alimony payments. The Adminis.trator must honor .a "qualified domestic 

· relations order." A "qualified domestic relations order" is defined as a decree or 

order issued ~y a. court that obligates you to pay child support or ~limoni or 

. . 

31 See SPD summarizing 1989 amendments to the Plan, at Enclosure 20. An SPD summarizes plari provisions; the 

SPD does not supplant the terms of a plan. If there is a conflict between an SPD and a:pJan'stern1s, the plan's terms 

· are controlling. As noted above, the Plan document does not include provisions relating to QDROs; thus, th·e Appeals 

·Board reyiewed the Plan's SPD. · · · , 

9 
otherwise allocates a portion of y"our assets in Hie Plan to your spouse, former 

spouse, child or other dependent. If a qualified domestic relations order is received 

by the Administrator, all or a portion of you~ benefits may be used to satisfy the 

obligation. The Administrator will determine _the validity of aoy domestic relations 

order received. · · 

·A QDRO Is Not Subiect to ERISA 's Prohibition o(Assignment 

and Alienation of Benefits 

Under section 206(d)(l) of ERISA, "[e]ach pension plan shall provide that benefits provided 

·under th~ plaff may not be assigned or alienated."32 ERISA section 206(d)(3)(A) provides that 

section 206( d)(l) does not apply with respect to a domestic relations order determined to be a: 

qualified domestic relations ord.er. 33 E:RISA sec.ti on 206( d)(3 )(A) also provides that "each pension 

plan shall provide for the payment of benefits in accordance with the applicable requiremer1ts of 

any qualified dornestic relations order." 

. Section 206(d)(3)(D) of ERISA provides: 

(D) A domestic relations order meets the requirements of this subparagraph only 

! if such order- : 

(i) · does not require a plan to provide any type or form of benefit, or any 

option, not otherwise provided under the plan, 

(ii) does not require the plan to provide increased benefits (determined on . 

the basis of actuarial value), and · 

(iii) does not require the payment of benefits to an alternate payee which are 

required to be paid to another alternate payee under another order 

previously determined to be a qualified domestic relations order . 

. Section 206(d)(3)(J) of ERISA provides that "[a] person who is an alternate payee under a 

qualified domestic relations order shall be considered for purposes of any provision of this chapter 

· [ of ERIS A] a benefici~ry under the plan .... " As stated in VanderKam v. VanderKam, ~'[t]he 

protection of beneficiarie·s - especially spouses - remains a paramount ERISA objective."34 

Pursu~nt to section 206(d)(3)(K) of ERISA,. "the temi 'alternate payee' means any spouse, · -· 

former spouse, child, or other dependent of a participant who is recognized .by a domestic relations 

order as having a right to receive all, or a portion of, the benefits payable under a plan with respect 

to such participant." 

j2 Section 206(d) of ERISA'. is applicable to defined benefit plans, as well as to ERISA-covered individual accou~t 

plans (e.g., defined contribution plans) over which PBGC hc!S no jurisdiction. See section 206 of ERlSA, 29 U.S.C. 

section 1056, at Enclosure 21 . 

. 

33 Parallel provisions regardin.g QDROs also appear at section 4·14(p) of the Code. 

34 See 776 F.3d 883, 886 (D.C. Cir: 2015), at Enclosure 22. See generally VanderKam v. Pension Ben. Guar. Corp., 

943 F.Supp.2d 130 (D.D.C.2013), at Enclosure 23. · 

10 
Regulation Issued bv the US. Department o(Labor 

and Additional Guidance 

In section .100 I · of the Pension Protection Act of 2006, Congress directed the Secretary of 

Labor to dlo.the following: 35 

' . . . [I]ssue regula,tions under sectiori 206( d)(~) of the Employee Retirement 

[Income] Security Act of 1974 [ERIS A] and section 414(p) of the Internal Revenue 

Code of 1986 which clarify that-

( I) a domestic relations order otherwise meeting the requirements to be a·, 

qualified domestic relations order, including the requirements of -section 

206(d)(3)(D) of such Act [ERISA] an9 section 414(p)(3) of such Code, shall 

not fail to be treated as a qualified domesfrc relations o·rder solely. because-

(A) the order is issued after, or revises, another domestic relations order or" 

. qualifie<;i domestic relations order; or 

(B) of the time at which it is issued; and 

(2) any order de?cribed in paragraph (1) shall be subject to the same 

requirements and protections which apply to qualified domestic ·relations 

orders, including the provisions of section 206( d)(3)(H) of such Act and 

section 414(p )(7) of such Code. · 

On June 10, 2010, the U.S. Department of Labor's Employee Benefits Security 

. Administration ("EBSA") issued a final rule (the "DOL regulation") related to -domestic relations · 

orders under ERISA section 206(d)(3) .. 

36 Among other things, the DOL regulation addres_ses 

subsequent domestic relations orders, the timing of domestic relations orders, and requirements 

and protections under section 206(d)(3). · 

PBGC, EBSA, and the Internal Revenue Service ("IRS"), in coordina~ion with each other, 

have issued publications concerning QDROs. In addition to publishing PBGC Operating Policy 

Manual 6.673, PBGC published a booklet.titled "Qualified Domestic Relations Orders & PBGC" 

(the '.'PBGC-QDRO Booklet").37 Similarly, EBSA published a b_ooklet titled "QDROs[:] The 

Division of Retirement Benefits Through Qualified Domestic Relations Orders" (the "DOL QDRO 

·Booklet").38 IRS Notice 97-11 also provides sample language for QDROs.39 . . . 

. 35 See excerpt from Pub. L. No. I 09-280, at Enclosure 24. 

36 See 75. Fed. Reg. 32846 (June 10, 2010), at Enclosure 2s: The DOL regulation is codified.at 29 C.F'.R. section 

2530.206. . 

37 The PBGC QDRO Booklet can be found at htt-ps://www.pbgc.gov/sites/default/tiles/Iegacy/docs/QDRO.pdf. 

38 The DOL QDRO . Bookl~t can be found at https://www.dol.gov/sites/default/files/ebsa/about~ebsaiouractivities/resource-center/publ ications/qdros.pdf. Question 2-19 addresses the unique nature of de~ned benefit plans 

trusteed by !PBGC. 

39 See Enclosure 26. The Sample Language provided in IRS Notice 97-11 also appears at Appendix C of the D_OL 

QDRO Booklet. 
The 2008 ODRd is a Sepa,~dte Interest QDRO 

Generally, there are two ways in which ·a participant and·an alternate payee can divide a 

participant's pension benefit pursuant to a QDRO, in accordance with BRISA se<::tiorJ. 206(d)(3). 

Under one method, the participant's accrued benefit is divided between the pa1iicipant and the . 

alternate payee. This approach, often referred to as a '.'separate interest" QDRO, allocates part of 

the total benefit to the alternate payee, and part to the pru1icipant. The other approach.for dividing 

the participant's benefit, often cailed a "shared payment" QDRO, is not based on the participant's 

total benefit~ but rather on the monthly payments that the participant receives from the pension 

plan. 

Separate interest QDROs require the pla~ to treat the alternate payee's share of the pension as 

his or her own plan benefit, which is payable1

throughout the life of the alternate payee and not 

dependent upon the life of the pa1ticipant. 

In Einhorn v. A:fcCajferty, the court explained that "[t]h~ defining feature of a separate interest 

in a pension plan is that the plan administrator. [ or PBGC, as trustee of the P Ian J 'treats each spouse 

as an independ~nt participant under the plan,'. which means that ' [ e Jach spouse can determine · 

independently the date on which his or her benefits will start [on or after the plan participant's 

earliest retirement date J. "'40 · 

The 2008 QDRO; pursuant to its terms, divides your benefit as. a separate interest. "[U)nder 

the separate interest approach, 'becaus~ the spouses' benefits ¥e independent, neither spouse's 

benefits stop upon the death of the other. "'41 . . 

Discussio.n 

' As discussed below, the Appeals Board finds that the 2012 DRO cannot be qualified pursuant 

to ERJSA section 206(d)(3)(D)(i), because .the 2012 DRO requires PBGC to provide a _type or 

form of benefit, or·an option, that is not otherwise available under the Plan or permitted .by DOL 

and PBGC.regulations. · 

Your benefit, payable by PBGC in accordance with the 2008 QDRO, is the remaining benefit 

due·to you under the Plan. PBGC may qualify a future DRO that removes the surviving spouse 

rights from your remaining portion of the Plan benefit, if the qualification occurs prior to your . • 1 

benefit commencement date. · / . 

The 2012 DRO Cannot'Require PBGC to Provide a Type or 

Form o(Benefi.t. or an Option. Not Provided. Under the Plan 

The 2012 DRO caruiot be qualified because it fails to meet the requirements of ERJSA section 

206(d)(3)(D)(i). ERISA section 206(d)(3)(D)(i) provides that a domestic relati9ns order can be 

40 Einhorn 1:'· McCafferty, 2016 WL 1273937, at 6 (E.D.Pa. M~rch 31, 2016), at Enclosure 27 (quoting Brett R. Turner, 

2 Equitable _Distribution of Property§ 6.34 (3d ed.), Westiaw (databas~ updated ~ov. 20 16), at Enclosure 28). ·. _ 

41 Einhorn, at 2, at Enclosure 27 (quoting Turner, 2 Equitable Distribution of Property§ 6.34, at Enclosure 28). 

12 
qualified only if such domestic·relations order "does not require a plan to provide any type or form 

of benefit, or any option, not.otherwise provided under the plan." 

Forms of benefit payment and options related to benefit payments are specifically addressed 

in the Plan terms. Section 4.01 of the Plan provides that an unmarried.participant's automatic form 

of benefit is an SLA. Unless an "optional settlement" is elected by a participant under.section 4.09 

of the Plan, a married participant's form· of benefit under section 4.08 of the Plan shall be "an 

amount actuarially equivalent to the participant's Normal Retirement Benefit accrued to date with 

at least 50% but not more than 100% of such reduced retirement benefit continued to the surviving 

spouse." 

As noted earlier, nowhere does the Plan provide "any type or form of benefit or any option'.' 

that permits the benefit of a pat1icipant or beneficiary to be terminated or revoked once the benefit 

has commenced. Fu11ber, the Plan does not permit the reannuitization of a pa1ticipant's ·or 

beneficiary's benefit after the original arurnity starting date. 

The Appeals Board finds that your situation is analogous to Example 4 in section 

2530.206(d)(2) of the DOL regulation. Example 4 in DOL regulation section 2530.206(d)(2) 

provides the following: 

Example (4). Type or form of benefit. 

Participant retires and commences benefit payments in the form of a straight life 

annuity based on the life of Participant, with respect to which Spouse consents to 

the waiver of the surviving spousal rights provided under the plan and section 205 

of ERISA. Participant and Spouse divorce after the annuity starting date and 

present the plan with a doinestic relations order that eliminates the straight life 

annuity based on Participant's life and provides for Spouse, as alternate payee, to 

receive all future _benefits in the fo~ of a straight life annuity based on the life of 

Spouse. The.plan does not allow reannuitization with a new annuity starting 

date, as defined"fn section 205(h)(2) of ERISA (and as further explained in 26 

CFR JAOJ(a)-20, Q&A- lO(b)). Pursuant to paragraph (c)(l) of this section 

[regarding the timiitg of domestic relations orders/, the order does not fail to be 

a QDRO solely because it is issued after the annuity starting date, but the order 

would/ail to be a QDRO under section 206(d)(3)(D)(i) ant( paragraph (d)(l) of 

this section because the order requires the plan to provide a type or form of 

benefit, or any option, not otherwise provided under the plan. However, the order 

would not fail to be a QDRO under section 206(d)(3)(D)(i) and paragraph (d)(l) of 

this secti01i. if instead it were to require all of Participant's future payments under 

the plant~ be paid instead to Spouse, as an alternate payee (so that P.ayments that 

would otherwise be paic;l to the Participant during the Participant's lifetime are 

instead to be made to the Spouse during the Participant's Hfetime). 

(Emphasis Added. )

42 

4~ ERJSA s.ection ~05(h)(2)(A)(i) provides that an aru:iuity starting date is "the first day of the first period-for which 

.an amoun~ is payable as an annuity." · 

13 
~. . . 

/ 

Like ·the plan in Example 4, above, the Plan does not perm.it the : reannuitization of a 

participant's or beneficiary's benefit ' after the original . annuity starting date. Just as 

·reannuitizations are described in the ·preamble to the DOL regulation,43 the 2012 DRO directs· 

PBGC "to substitute one measuring life for another," by substituting your life for Ms. 

life. The 2012 DRO also directs PBGC ·to "change. the form of benefit," by terminating Ms. 

- SLA and giving her a shar~d-payment measured by your life.

44 The Appeals Board 

concludes· that the 2012 DRO requires Ms. benefit to be reannuitized. It therefore 

cannot be qualified pursuant to ER.ISA section 206(d)(3)(D)(i) because it requires· PBGC to 

provide a type or form of benefit, or an option, not otherwise provided under the Plan. · 

If PBGC were to qualify the 20!2 DRO, the impact on .Ms. benefit would be 

significant; Ms.- separate interest.benefit of$235.79 per month under the 2008 QDRO, 

, currently payable as an SLA measured by her lifetime, w_ould terminate. Because you have not 

commenced your benefit'and may elect not to commence your benefit until an unki1own date, Ms. 

- would no longer be entitled to recei~e ~ PBGC-payable benefit, at least until the date 

you efect to commence y~mr benefit. When or if you do elect to commence your benefit, only then 

would Ms. . benefit recommence as a shared payment benefit. In addition, Ms. 

· - benefit would no longer be payable for her lifetime. Rather, under the 2012 DRO, 

Ms. bepefit would be measured by your lifetime. If you were to predecease Ms. 

who is four years younger than you, she would not be entitled to any further payments 

fromPBGC . 

. -Therefore, as stated above, the Appeals Board concludes that the 2012 DRO -can;not be 

qualified under ERISA section 206( d)(3)tD)(i) because it requires PBOC to provide a type or form 

of benefit, or an option~ not otherwise provided under the Plan. · 

·Further; the B.oard notes that PBGC regulation section 4022.8( d) prohibits a change in the 

form of benefit following commencement of benefit payments,45 PBQC.reg\llation ·section 

402i8( d), Change in benefit form; provides that "[ o ]nee payment of a benefit starts, the benefit 

form cannot be changed." Consistent-with the terms of the 2008 QDRO, Ms. . . began . 

receiving benefit payments effective October 1, 2009. The Board concludes that any change in 

the benefit fomi currently being paid to Ms. - would be inconsistent with PBGC 

regulation section 4022:s(d).46 . . 

43 See 75. Fed. Reg. at 32848. 

44 Id. 

45_ 29 C.F.R. section 4022:S(d). 

~6 PBGC anticipated applicability of PBGC regulation section 4022.8 · to alternate payees; ·specifically, section 

4022.8(b)(2)(ii) provides the following: . . 

(b) Automatic PBGCform-

(2) Beneficiaries. 

(ii) Alternate payees. The ·automatic P:BGC form with resp~ct to an alternate payee ·with a 

separate interest under a qualified domestic relations ·order is the fonn an uiimarr.ied . · · 

parti'cipant would be entitled to receive from the plan in the .abserice of an election. 

· 14 

I • 
PBGC May Qualify a DRO Removing Surviving Spouse Rights 

· From Your Remaining Portion o(the Plan Benefit 

The Appeals Board notes that the 2008 QDRO currently in effect requires that Ms. -

as the Alternate Payee, be treated as your surviving spouse for. purposes of the Plan's qualified 

pre-retirement survivor annuity ("QPSA~ifiedjoint.and survivor annuity ("QJSA"). This 

means that undei· the 2008 QDRO, Ms. - is entitled to a portion of your benefit ( equal to 

one-half of the benefit you accrued under the Plan) if you predecease her, regardless of whether 

you have COf!1111enced your benefit.. Pursuant to the 2008 QDRO, you must elect ·a joint and . 

survivor form of benefit when you elect t_o commence benefit payments. · 

In Carmona v. Carmona, the court-held that "QJSA surviving spouse benefits i1Tevocably vest . J . 

in the participant's spouse at the time of the annuity start date-in this case the participant's 

retirement-and may ·not be reassigned to a subsequent spouse/'47 As noted above, -you have.not 

yet retired and commenced your benefit under the Plan; thus, there is no annuity start date. 

A new domestic relations order, the purpose of which is to remove Ms. tatus as 

your surviving spouse with respect to your remaining benefit pursuant to the 2008 QDRO, may be · 

. a qualified domestic relations order, if such qualification is made prior. to your commencement of 

· your PBGC-payable benefit under the Plan . . 

· Decision 

Having reviewed this matter in accordaiice with the Memorandum Opinion and Order of the 

· ·united States District Court for the Dist.rict of Columbia, the Appeals Board finds that the 2of2 

DRO cannot be qualified for the reasons explained in this decision. Although the outcome is the 

same, this decision supersed.es the Appeals Board's December 28, 2012 decision. , 

This is the Agency's final decision on this matter and you may, if you wish, seek court review 

of this decision in the United States District Court for the District of Columbia. If you have any' 

questions about your PBGC-payable benefit, please call PBGC's Customer Contact Center at 1-

800-400-7242. 

Sincerely, 

. \ 

~¥/ . . 0¥ 

Lisa M. Alexander . 

Chair, Appeals Board 

cc: Esq. (with enclosures; with your address redacted) 

(without enclosures; with your address redacted) 

47 603 F.3d I 041, · I 048 (9th Cir. 20 I 0), at Enc,losure 29. See also VanderKam, 943 F.Supp.2d. at I 38, at Enclosur~ 

23. . . 

15 
_,.., Twenty-Nine Enclosures: 

/ 

16 

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