[Federal Register Volume 72, Number 44 (Wednesday, March 7, 2007)]
[Rules and Regulations]
[Pages 10070-10074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-3820]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2530

RIN 1210-AB15


Interim Final Rule Relating to Time and Order of Issuance of 
Domestic Relations Orders

AGENCY: Employee Benefits Security Administration, Department of Labor.

ACTION: Interim final rule with request for comments.

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SUMMARY: This document contains an interim final rule issued under 
section 1001 of the Pension Protection Act of 2006, Public Law 109-280 
(PPA), which requires the Secretary of Labor to issue, not later than 1 
year after the date of the enactment of the PPA, regulations clarifying 
certain issues relating to the timing and order of domestic relations 
orders under section 206(d)(3) of the Employee Retirement Income 
Security Act of 1974, as amended (ERISA). The rule contained in this 
document provides guidance to plan administrators, service providers, 
participants, and alternate payees on the qualified domestic relations 
order (QDRO) requirements under ERISA. The rule is being adopted in 
response to the specific statutory directive contained in the PPA. 
Interested persons are invited to submit comments on the interim final 
rule for consideration by the Department of Labor in developing a final 
rule.

DATES: Effective date: The interim final rule is effective on April 6, 
2007. Comment date: Written comments on the interim final rule must be 
received by May 7, 2007.

ADDRESSES: To facilitate the receipt and processing of comments, EBSA 
encourages interested persons to submit their comments electronically 
to <a href="/cdn-cgi/l/email-protection#c5a0e88a978c85a1aaa9eba2aab3"><span class="__cf_email__" data-cfemail="ceabe3819c878eaaa1a2e0a9a1b8">[email protected]</span></a>, or by using the Federal eRulemaking portal http://www.regulations.gov (follow instructions for submission of comments). 
Persons submitting comments electronically are encouraged not to submit 
paper copies. Persons interested in submitting comments on paper should 
send or deliver their comments (preferably three copies) to: Office of 
Regulations and Interpretations, Employee Benefits Security 
Administration, Room N-5669, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Washington, DC 20210, Attention: QDRO Regulation. All 
comments will be available to the public, without charge, online at 
http://www.regulations.gov and http://www.dol.gov/ebsa, and at the 
Public Disclosure Room, Employee Benefits Security Administration, U.S. 
Department of Labor, Room N-1513, 200 Constitution Avenue, NW., 
Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Yolanda R. Wartenberg, Office of 
Regulations and Interpretations, Employee Benefits Security 
Administration, U.S. Department of Labor, Washington, DC 20210, (202) 
693-8510. This is not a toll free number.

SUPPLEMENTARY INFORMATION:

A. Qualified Domestic Relations Order Provisions

    Section 206(d)(3) of title I of ERISA, and the related provisions 
of section 414(p) of the Internal Revenue Code of 1986 (Code), 
establish a limited exception to the prohibitions against assignment 
and alienation contained in ERISA section 206(d)(1) and Code section 
401(a)(13).\1\ Under this limited exception, a participant's benefits 
under a pension plan may be assigned to an alternate payee, defined as 
the participant's spouse, former spouse, child, or other dependent, 
pursuant to an order that constitutes a qualified domestic relations 
order (QDRO) within the meaning of those provisions. Such QDROs, in 
addition, survive the federal preemption of State law imposed by ERISA 
section 514(a) by virtue of ERISA section 514(b)(7).
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    \1\ The QDRO provisions were added to ERISA and the Code by the 
Retirement Equity Act of 1984 (REA), Public Law 96-397, 96 Stat. 
1438 (1984). Except where no corresponding provision exists, all 
references to paragraphs of ERISA section 206(d)(3) should be read 
to refer to corresponding provisions of Code section 414(p). The 
Secretary of Labor has authority to interpret the QDRO provisions, 
section 206(d)(3), and its parallel provision at section 414(p) of 
the Code, and to issue QDRO regulations in consultation with the 
Secretary of the Treasury. 29 U.S.C. 1056(d)(3)(N). The Secretary of 
the Treasury has authority to issue rules and regulations necessary 
to coordinate the requirements of section 414(p) (and the 
regulations issued by the Secretary of Labor thereunder) with the 
other provisions of Chapter I of Subtitle A of the Code. 26 U.S.C. 
401(n). The Secretary of the Treasury has been consulted on this 
interim final rule.
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    Pursuant to the QDRO provisions, a plan administrator must 
determine, in accordance with specified procedures, whether an order 
purporting to divide a participant's benefits under a plan meets the 
applicable requirements set forth in section 206(d)(3) of ERISA. If the 
plan administrator determines that the order meets these requirements 
and is, accordingly, a QDRO within the meaning of section 206(d)(3), 
the plan administrator must distribute the assigned portion of the 
participant's benefits to the alternate payee or payees named in the 
order in accordance with the terms of the order.
    Subparagraphs (G) and (H) of ERISA section 206(d)(3) set forth 
provisions relating to the procedures that a plan must establish, and a 
plan administrator must observe, in determining whether an order is a 
QDRO and in administering the plan and the participant's benefits 
during the period in which the plan administrator is making such a 
determination. The plan's procedures must be reasonable, must be in 
writing, must require prompt notification and disclosure of the 
procedures to participants and alternate payees upon receipt of an 
order, and must permit alternate payees to designate representatives 
for notice purposes. In addition, the plan administrator must complete 
the determination process and notify participants and alternate payees 
of its determination within a reasonable period after receipt of the 
order.
    Subparagraph (H) of section 206(d)(3) provides specific procedural 
protection of a potential alternate payee's interest in a participant's 
benefits during the plan's determination process and for a period of up 
to 18 months (the 18-month period) during which the issue of the 
qualified status of a domestic relations order is being determined--
whether by the plan administrator, by a court of competent 
jurisdiction, or

[[Page 10071]]

otherwise. During the 18-month period, a plan administrator must 
separately account for any amounts that would have been payable to the 
alternate payee if the order had been immediately treated as a QDRO and 
must pay these amounts (including any interest thereon) to the 
alternate payee if the order is deemed qualified within such period. If 
the issue as to whether the order is a QDRO is not resolved within the 
18-month period, the plan administrator is to pay such amounts to the 
person or persons who would have been entitled to the amounts if there 
had been no order. Any determination that an order is a QDRO that is 
made after the close of the 18-month period is to be applied 
prospectively only.
    If a plan fiduciary, acting in accordance with the fiduciary 
responsibility provisions of part 4 of title I of ERISA, treats an 
order as a QDRO (or determines that such an order is not a QDRO) and 
distributes benefits in accordance with that determination, paragraph 
(I) of section 206(d)(3) provides that the obligations of the plan and 
its fiduciaries to the affected participants and alternate payees with 
respect to the distribution shall be treated as discharged.
    The QDRO provisions detail specific requirements that an order must 
satisfy in order to constitute a QDRO. The order must be a ``domestic 
relations order'' issued pursuant to a State domestic relations law 
(including a community property law) that 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. 
Section 206(d)(3)(B)(ii). It must create or recognize the existence of 
an alternate payee's right to receive all or a portion of the benefits 
payable to a participant under a plan. Section 206(d)(3)(B)(i). 
Further, it must clearly specify the name and last known mailing 
address (if any) of the participant and the name and mailing address of 
each alternate payee covered by the order; the amount or percentage of 
the participant's benefits to be paid by the plan(s) to each such 
alternate payee, or the manner in which such amount or percentage is to 
be determined; the number of payments or period to which the order 
applies; and each plan to which the order applies. Section 
206(d)(3)(C). An order will fail to be a QDRO, however, if it requires 
the plan to provide any type or form of benefit, or any option, not 
otherwise provided under the plan; to provide increased benefits 
determined on the basis of actuarial value; or to pay benefits to an 
alternate payee that are required to be paid to another alternate payee 
under another order previously determined to be a QDRO. Section 
206(d)(3)(D).

B. Pension Protection Act of 2006

    Under section 1001 of the Pension Protection Act of 2006 (PPA), 
Public Law 109-280, section 1001, 120 Stat. 780 (2006), Congress 
instructed the Secretary of Labor to issue regulations, not later than 
1 year after the date of the enactment, under section 206(d)(3) of 
ERISA and section 414(p) of the Code, to clarify that--(1) a domestic 
relations order otherwise meeting the requirements to be a QDRO, 
including the requirements of section 206(d)(3)(D) of ERISA and section 
414(p)(3) of the Code, shall not fail to be treated as a QDRO solely 
because--(A) the order is issued after, or revises, another domestic 
relations order or QDRO; or (B) of the time at which it is issued. 
Section 1001 of the PPA also requires that the regulations clarify that 
such orders are subject to all of the same requirements and protections 
that apply to QDROs, including the provisions of section 206(d)(3)(H) 
of ERISA and section 414(p)(7) of the Code.

C. Overview of Interim Final Rule

Scope of the Regulation

    Paragraph (a) of the regulation provides that the scope of the 
regulation is to implement the directive contained in section 1001 of 
the PPA to clarify certain timing issues with respect to domestic 
relations orders and qualified domestic relations orders under ERISA.

Subsequent Domestic Relations Orders

    Paragraph (b)(1) of the regulation provides that a domestic 
relations order otherwise meeting ERISA's requirements to be a QDRO 
shall not fail to be treated as a QDRO solely because the order is 
issued after, or revises, another domestic relations order or QDRO. 
Paragraph (b)(2) provides examples of this rule.\2\ Example 1 
illustrates this rule as applied to a subsequent order revising an 
earlier QDRO involving the same parties. Example 2 illustrates this 
rule in the context of a subsequent order involving the same 
participant and a different alternate payee.
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    \2\ The examples in paragraphs (b)(2), (c)(2) and (d)(2) of the 
regulation show how the rules in paragraphs (b)(1), (c)(1) and 
(d)(1), respectively, apply to specific facts. They do not represent 
the only circumstances for which these rules would provide 
clarification.
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Timing of Domestic Relations Order

    Paragraph (c)(1) of the regulation provides that a domestic 
relations order otherwise meeting ERISA's requirements to be a QDRO 
shall not fail to be treated as a QDRO solely because of the time at 
which it is issued. Paragraph (c)(2) provides examples of this rule. 
Example 1 illustrates the principle that a domestic relation order will 
not fail to be a QDRO solely because it is issued after the death of 
the participant. Example 2 illustrates that a domestic relation order 
will not fail to be a QDRO solely because it is issued after the 
parties divorce. Example 3 illustrates that an order would not fail to 
be a QDRO solely because it is issued after the participant's annuity 
starting date.

Requirements and Protections

    Paragraph (d)(1) of the regulation provides that any domestic 
relations order described in paragraph (b) or (c) of the regulation 
shall be subject to the same requirements and protections that apply to 
all QDROs under section 206(d)(3) of ERISA. Paragraph (d)(2) provides 
examples of this rule. Example 1 illustrates that, although an order 
will not fail to be a QDRO solely because it is issued after the death 
of the participant, the order would fail to be a QDRO if it requires 
the plan to provide a type or form of benefit, or any option, not 
otherwise provided under the plan. Example 2 illustrates application of 
the protective rules regarding segregation of payable benefits to a 
second order involving the same participant and alternate payee. 
Example 3 illustrates that, although an order will not fail to be a 
QDRO solely because it is issued after another QDRO, the order would 
fail to be a QDRO if it assigns benefits already assigned to another 
alternate payee under another QDRO.

D. Effective Date

    The interim final regulation will be effective 30 days after the 
date of publication in the Federal Register. The guidance provided by 
the interim final regulation is in response to the direction from 
Congress in section 1001 of the PPA to the Secretary of Labor to issue 
regulations to clarify current law under section 206(d)(3) of ERISA. 
The Department, therefore, has determined it is necessary and 
appropriate to proceed with an interim final rule to provide the 
clarification mandated by Congress, while also requesting public 
comments on the matter for the purpose of drafting a final rule.

E. Justification for Interim Final Rulemaking

    This regulation incorporates, with minor changes, language in 
section 1001 of the Pension Protection Act. The changes do not modify 
the meaning of

[[Page 10072]]

the statutory language. In the Department's view, Congress directed the 
Secretary to adopt the substance of this language as a clarification of 
current law. In issuing these regulations, the Secretary has not 
deviated from the narrow Congressional directive. The examples included 
in the regulation merely provide interpretive guidance by explaining 
how the statutory language would apply to particular facts. Therefore, 
in accordance with section 553(b) of the Administrative Procedure Act, 
5 U.S.C. 553(b), the Department finds for good cause that notice and 
public procedure on this regulation is unnecessary. To the extent that 
the examples go beyond the statutory language, they are purely 
interpretive and are not subject to the notice and public procedure 
requirements of section 553(b).

F. Request for Comments

    The Department invites comments from interested persons on all 
aspects of the interim final rule, including whether, and to what 
extent, there are additional factual scenarios that should be added to 
the examples already in the interim final rule. To facilitate the 
receipt and processing of comments, EBSA encourages interested persons 
to submit their comments electronically by e-mail to <a href="/cdn-cgi/l/email-protection#3d5810726f747d595251135a524b"><span class="__cf_email__" data-cfemail="03662e4c514a43676c6f2d646c75">[email protected]</span></a>, or 
by using the Federal eRulemaking portal at http://www.regulations.gov 
(follow instructions for submission of comments). Persons submitting 
comments electronically are encouraged not to submit paper copies. 
Persons interested in submitting comments on paper should send or 
deliver their comments (preferably three copies) to: Office of 
Regulations and Interpretations, Employee Benefits Security 
Administration, Room N-5669, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Washington, DC 20210, Attention: QDRO Regulation. All 
comments will be available to the public, without charge, online at 
http://www.regulations.gov and http://www.dol.gov/ebsa, and at the 
Public Disclosure Room, Employee Benefits Security Administration, U.S. 
Department of Labor, Room N-1513, 200 Constitution Avenue, NW., 
Washington, DC, 20210.

G. Regulatory Impact Analysis

Executive Order 12866 Statement

    Under Executive Order 12866 (58 FR 51735), the Department must 
determine whether a regulatory action is ``significant'' and therefore 
subject to review by the Office of Management and Budget (OMB). Section 
3(f) of the Executive Order defines a ``significant regulatory action'' 
as an action that is likely to result in a rule (1) having an annual 
effect on the economy of $100 million or more, or adversely and 
materially affecting a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local or tribal governments or communities (also referred to as 
``economically significant''); (2) creating serious inconsistency or 
otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raising novel legal or policy issues arising 
out of legal mandates, the President's priorities, or the principles 
set forth in the Executive Order. The Department has determined that 
this regulatory action is not economically significant within the 
meaning of section 3(f)(1) the Executive Order. However, the Office of 
Management and Budget (OMB) has determined that the action is 
significant within the meaning of section 3(f)(4) of the Executive 
Order, and the Department accordingly provides the following assessment 
of its potential costs and benefits.
    This interim final rule is intended to clarify the statutory 
requirements for QDROs under section 206(d)(3) of ERISA and section 
414(p) of the Code. The provisions of section 206(d)(3) generally 
assist State authorities in deciding permissible ways in which pension 
benefits may be divided in domestic relations matters. The rules and 
processes under section 206(d)(3) make it possible for plan 
administrators to determine whether a State order seeking to assign 
pension benefits to an alternate payee should be given effect under the 
plan; clear rules concerning what constitutes a QDRO have the effect of 
assisting plan administrators in reviewing orders received by the plan, 
as well as participants and alternate payees in planning how to take 
pension assets into account when significant events require making a 
division of marital assets.
    In directing the Department, in section 1001 of the Pension 
Protection Act, to clarify the application of the QDRO provisions, 
Congress expressed the view that existing uncertainty about the 
application of those provisions has caused difficulties meriting 
resolution through regulatory action. Uncertainty concerning the 
application of the QDRO provisions can impose litigation and other 
costs on plans, participants, and alternate payees, as well as on State 
domestic relations authorities, that will be reduced through the 
promulgation of this rule. Consistent with the view of Congress, the 
rule clarifies, first, that the sequence in which multiple orders may 
be issued does not in itself affect whether the orders are QDROs, and, 
second, that the time at which an order is issued does not, in itself, 
determine whether an order is or is not a QDRO. The rule further 
reiterates that an order must meet the specific requirements of 
sections 206(d)(3) of ERISA and section 414(p) of the Code.
    By reducing uncertainty over the application of the statutory 
requirements in specific circumstances, the rule is expected to reduce 
costs that might otherwise arise from the necessity of resolving 
uncertainty in such circumstances. By providing clearer rules for plan 
administrators, the rule is also expected to increase the efficiency of 
plan administration. In addition, the Department is issuing this rule 
in direct response to a Congressional directive. As described above, 
section 1001 of the Pension Protection Act requires the Department to 
issue regulations clarifying that an order otherwise meeting the 
requirements of section 206(d)(3) of ERISA for a QDRO should not fail 
to be treated as a QDRO solely because it was issued after or revised 
another order, or because of the time at which it was issued. In 
issuing this interim final rule, therefore, the Department is 
fulfilling objectives expressly endorsed by Congress. Because the rule 
applies only in certain specific circumstances and affects only a small 
subset of domestic relations orders, the Department believes that its 
economic impact will be small, overall, but positive.
    The rule is not anticipated to impose increased compliance costs, 
since it merely establishes the legal effect of certain sequences of 
events. Although it may cause some orders to be treated as QDROs that 
otherwise might be disputed (or fail to be treated as a QDRO), the rule 
provides certainty with respect to the circumstances it covers, which 
will aid State authorities seeking to divide pension benefits and 
assist plan administrators seeking to discharge their obligations under 
section 206(d)(3) of ERISA, without limiting the power of State 
authorities to determine the proper division of marital assets. The 
rule is expected generally to provide benefits to pension plans, plan 
participants and alternate payees, and State domestic relations 
authorities by increasing the clarity of the rules that apply to QDROs.
    Based on the foregoing assessment, the Department concludes that 
promulgation of this interim final rule

[[Page 10073]]

will provide substantial benefits without imposing major costs.

Paperwork Reduction Act

    The interim final regulation being issued here is not subject to 
the requirements of the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 
et seq.) because it does not contain an ``information collection'' as 
defined in 44 U.S.C. 3502 (11).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes 
certain requirements with respect to federal rules that are subject to 
the notice and comment requirements of section 553(b) of the 
Administrative Procedure Act (5 U.S.C 551 et seq.) and that are likely 
to have a significant economic impact on a substantial number of small 
entities. Unless an agency certifies that a proposed rule will not have 
a significant economic impact on a substantial number of small 
entities, section 603 of the RFA requires that the agency present an 
initial regulatory flexibility analysis at the time of the publication 
of the notice of proposed rule-making describing the impact of the rule 
on small entities and seeking public comment on such impact. Because 
this rule is being issued as an interim final rule, the RFA does not 
apply and the Department is not required to either certify that the 
rule will not have a significant impact on a substantial number of 
small businesses or conduct an initial regulatory flexibility analysis. 
Nevertheless, the Department has considered the likely impact of the 
interim rule on small entities in connection with its assessment under 
Executive Order 12866, described above, and believes this rule will not 
have a significant impact on a substantial number of small entities. 
For purposes of this discussion, the Department deemed a small entity 
to be an employee benefit plan with fewer than 100 participants. The 
basis of this definition is found in section 104(a)(2) of ERISA, which 
permits the Secretary of Labor to prescribe simplified annual reports 
for pension plans which cover fewer than 100 participants. The 
Department invites comments on the effect of the interim final rule on 
small entities.

Congressional Review Act

    The interim final rule being issued here is subject to the 
Congressional Review Act provisions of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.) and will be 
transmitted to Congress and the Comptroller General for review. The 
interim final rule is not a ``major rule'' as that term is defined in 5 
U.S.C. 804, because it does not result in (1) an annual effect on the 
economy of $100 million or more; (2) a major increase in costs or 
prices for consumers, individual industries, or federal, State, or 
local government agencies, or geographic regions; or (3) significant 
adverse effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export markets.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4), the interim final rule does not include any federal mandate 
that may result in expenditures by State, local, or tribal governments, 
or impose an annual burden exceeding $100 million on the private 
sector.

Federalism Statement

    Executive Order 13132 (August 4, 1999) outlines fundamental 
principles of federalism and requires federal agencies to adhere to 
specific criteria in the process of their formulation and 
implementation of policies that have substantial direct effects on the 
States, the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. This interim final rule does not have 
federalism implications because it has no substantial direct effect on 
the States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Section 514 of ERISA provides, with 
certain exceptions specifically enumerated, that the provisions of 
titles I and IV of ERISA supersede any and all laws of the States as 
they relate to any employee benefit plan covered under ERISA. One 
exception described in section 514(b)(7) is for qualified domestic 
relations orders, as defined in section 206(d)(3) of ERISA. The interim 
rule does not alter the provisions of the statute, but merely clarifies 
the status of certain types of domestic relations orders under ERISA.

List of Subjects in 29 CFR Part 2530

    Alternate payee, Divorce, Domestic relations orders, Employee 
benefit plans, Marital property, Pensions, Plan administrator, 
Qualified domestic relations orders, Spouse.

0
For the reasons set forth in the preamble, the Department amends 
Subchapter D, Part 2530 of Title 29 of the Code of Federal Regulations 
as follows:

Subchapter D--Minimum Standards for Employee Pension Benefit Plans 
Under the Employee Retirement Income Security Act of 1974

PART 2530--RULES AND REGULATIONS FOR MINIMUM STANDARDS FOR EMPLOYEE 
PENSION BENEFIT PLANS

0
1. The authority citation for part 2530 is revised to read as follows:

    Authority: Secs. 201, 202, 203, 204, 210, 505, 1011, 1012, 1014, 
and 1015, Pub. L. 93-406, 88 Stat. 852-862, 866-867, 894, 898-913, 
924-929 (29 U.S.C. 1051-4, 1060, 1135, 26 U.S.C. 410, 411, 413, 
414); Secretary of Labor's Order No. 13-76. Section 2530.206 also 
issued under sec. 1001, Pub. L. 109-280, 120 Stat. 780.


0
2. Add Sec.  2530.206 to read as follows:


Sec.  2530.206  Time and order of issuance of domestic relations 
orders.

    (a) Scope. This section implements section 1001 of the Pension 
Protection Act of 2006 by clarifying certain timing issues with respect 
to domestic relations orders and qualified domestic relations orders 
under the Employee Retirement Income Security Act of 1974, as amended 
(ERISA), 29 U.S.C. 1001 et seq.
    (b) Subsequent domestic relations orders. (1) Subject to paragraph 
(d)(1) of this section, a domestic relations order shall not fail to be 
treated as a qualified domestic relations order solely because the 
order is issued after, or revises, another domestic relations order or 
qualified domestic relations order.
    (2) The rule described in paragraph (b)(1) of this section is 
illustrated by the following examples:

    Example (1). Subsequent domestic relations order between the 
same parties. Participant and Spouse divorce, and the administrator 
of Participant's 401(k) plan receives a domestic relations order. 
The administrator determines that the order is a QDRO. The QDRO 
allocates a portion of Participant's benefits to Spouse as the 
alternate payee. Subsequently, before benefit payments have 
commenced, Participant and Spouse seek and receive a second domestic 
relations order. The second order reduces the portion of 
Participant's benefits that Spouse was to receive under the QDRO. 
The second order does not fail to be treated as a QDRO solely 
because the second order is issued after, and reduces the prior 
assignment contained in, the first order.
    Example (2). Subsequent domestic relations order between 
different parties. Participant and Spouse divorce, and the 
administrator of Participant's 401(k) plan receives a domestic 
relations order. The administrator determines that the order is a 
QDRO. The QDRO allocates a portion of

[[Page 10074]]

Participant's benefits to Spouse as the alternate payee. Participant 
marries Spouse 2, and then they divorce. Participant's 401(k) plan 
administrator subsequently receives a domestic relations order 
pertaining to Spouse 2. The order assigns to Spouse 2 a portion of 
Participant's 401(k) benefits not already allocated to Spouse 1. The 
second order does not fail to be a QDRO solely because the second 
order is issued after the plan administrator has determined that an 
earlier order pertaining to Spouse 1 is a QDRO.

    (c) Timing. (1) Subject to paragraph (d)(1) of this section, a 
domestic relations order shall not fail to be treated as a qualified 
domestic relations order solely because of the time at which it is 
issued.
    (2) The rule described in paragraph (c)(1) of this section is 
illustrated by the following examples:

    Example (1). Orders issued after death. Participant and Spouse 
divorce, and the administrator of Participant's plan receives a 
domestic relations order, but the administrator finds the order 
deficient and determines that it is not a QDRO. Shortly thereafter, 
Participant dies while actively employed. A second domestic 
relations order correcting the defects in the first order is 
subsequently submitted to the plan. The second order does not fail 
to be treated as a QDRO solely because it is issued after the death 
of the Participant.
    Example (2). Orders issued after divorce. Participant and Spouse 
divorce. As a result, Spouse no longer meets the definition of 
``surviving spouse'' under the terms of the plan. Subsequently, the 
plan administrator receives a domestic relations order requiring 
that Spouse be treated as the Participant's surviving spouse for 
purposes of receiving a death benefit payable under the terms of the 
plan only to a participant's surviving spouse. The order does not 
fail to be treated as a QDRO solely because, at the time it is 
issued, Spouse no longer meets the definition of a ``surviving 
spouse'' under the terms of the plan.
    Example (3). Orders issued after annuity starting date. 
Participant retires and commences benefit payments in the form of a 
straight life annuity, with respect to which Spouse waives the 
surviving spousal rights provided under the plan and section 205 of 
ERISA. Participant and Spouse divorce after Participant's annuity 
starting date and present the plan with a domestic relations order 
providing for Spouse, as alternate payee, to receive half of the 
benefit payments that are made to Participant after a specified 
future date. Pursuant to paragraph (c)(1) of this section, the order 
does not fail to be a QDRO solely because it is issued after the 
annuity starting date.

    (d) Requirements and protections. (1) Any domestic relations order 
described in this section shall be subject to the same requirements and 
protections that apply to qualified domestic relations orders under 
section 206(d)(3) of ERISA.
    (2) The rule described in paragraph (d)(1) of this section is 
illustrated by the following examples:

    Example (1). Type or form of benefit. Participant and Spouse 
divorce, and their divorce decree provides that the parties will 
prepare a domestic relations order assigning 50 percent of 
Participant's benefits under a 401(k) plan to Spouse to be paid in 
monthly installments over a ten-year period. Shortly thereafter, 
Participant dies while actively employed. A domestic relations order 
consistent with the decree is subsequently submitted to the 401(k) 
plan; however, the plan does not provide for ten-year installment 
payments of the type described in the order. Pursuant to paragraph 
(c)(1) of this section, the order does not fail to be treated as a 
QDRO solely because it is issued after the death of Participant, but 
the order would fail to be a QDRO under section 206(d)(3)(D)(i) and 
paragraph (d)(1) 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.
    Example (2). Segregation of payable benefits. Participant and 
Spouse divorce, and the administrator of Participant's plan receives 
a domestic relations order under which Spouse would begin to receive 
benefits immediately if the order is determined to be a QDRO. The 
plan administrator separately accounts for the amounts covered by 
the domestic relations order as is required under section 
206(d)(3)(H)(v) of ERISA. The plan administrator finds the order 
deficient and determines that it is not a QDRO. Subsequently, after 
the expiration of the segregation period pertaining to that order, 
the plan administrator receives a second domestic relations order 
relating to the same parties under which Spouse would begin to 
receive benefits immediately if the second order is determined to be 
a QDRO. Notwithstanding the expiration of the first segregation 
period, the amounts covered by the second order must be separately 
accounted for by the plan administrator for an 18-month period, in 
accordance with section 206(d)(3)(H) of ERISA and paragraph (d)(1) 
of this section.
    Example (3). Previously assigned benefits. Participant and 
Spouse divorce, and the administrator of Participant's 401(k) plan 
receives a domestic relations order. The administrator determines 
that the order is a QDRO. The QDRO assigns a portion of 
Participant's benefits to Spouse as the alternate payee. Participant 
marries Spouse 2, and then they divorce. Participant's 401(k) plan 
administrator subsequently receives a domestic relations order 
pertaining to Spouse 2. The order assigns to Spouse 2 a portion of 
Participant's 401(k) benefits already assigned to Spouse 1. The 
second order does not fail to be treated as a QDRO solely because 
the second order is issued after the plan administrator has 
determined that an earlier order pertaining to Spouse 1 is a QDRO. 
The second order, however, would fail to be a QDRO under section 
206(d)(3)(D)(iii) and paragraph (d)(1) of this section because it 
assigns all or a portion of Participant's benefits that are already 
assigned to Spouse 1 by the prior QDRO.

    Signed at Washington, DC, this 28th day of February, 2007.
Bradford P. Campbell,
Acting Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
[FR Doc. E7-3820 Filed 3-6-07; 8:45 am]
BILLING CODE 4510-29-P


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