I know I don’t need to tell you that times are tough out there, pros. So tough, in fact, that if your company sponsors a defined benefit plan, your participants might actually stage a sham divorce just to gain access to their pension funds.
Sound bananas? What I found even more surprising is that plan administrators and sponsors may have no legal recourse and might even just have to look the other way.
I was poking around on the Employee Benefits Legal Blog published by Fox Rothschild this morning, and came across a post from earlier in the week that addressed the question, “QDROs: Does a ‘sham divorce’ matter?” So rarely do such drama and benefits merge (except when it comes to health care reform) – I just had to continue reading.
Here’s the short version. In the case Brown v. Continental Airlines, a group of pilots – worried (perhaps justifiably) that the airline’s pension plan was on shaky ground – got divorced, and had qualified domestic relations orders that specified their ex-spouses as alternate payees for their benefits.
However, the plan’s administrator became suspicious when the pilots continued living with and in some cases even remarried their exes after the distributions were made. The plot thickens.
The Southern District Court of Texas found that so long as the terms of the QDRO were lawful and were met (which they were), then the plan administrator and sponsor were legally in the clear – even though they weren’t entitled to getting the money back.
Slick and shady dealings by the pilots, to be sure, but at least plan sponsors and administrators can sleep at night knowing that should their participants try to emulate the pilots’ duplicity, they’ll have the legal and moral high ground.
Already Registered?
If you have already registered to Employee Benefit Views, please use the form below to login. When completed you will immediately be directed to post a comment.
Not Registered?
You must be registered to post a comment. Click here to register.
3 Comment(s)
Posted by: qun z | January 3, 2011 7:33 PM
this into a news cartier love bracelet replica news story."I just tried to address my
replica gucci belt my concerns and voice it on YouTube,"
replica cartier love bracelet YouTube," said the pilot. "Basically all you gold cartier love bracelet replica you have to do, is we have bulgari necklaces have an employee line, you just put hermes bracelet replica put them through the employee screener."ABC News'
グッチ財布 News' Susie Banikarim and David Muir contributed designer inspired jewelry contributed this reportSugarloaf Ski Accident Investigation: Winds
bulgari necklaces Winds to Blame?Skier
Report this Comment
Posted by: EBN_Editor | November 2, 2009 7:52 PM
I didn't say the court found anything "shady" about the QDROs, but rather that the pilots actions were underhanded in getting a divorce (then living with or remarrying their exes) apparently solely to gain access to pension funds. I'm sorry you were confused.
Report this Comment
Posted by: Dennis19 | November 2, 2009 5:40 PM
This article is a little confusing, if not misleading. The Court did not say that there was anything "shady" about the QDROs in question. The article seems to suggest that the plan administrators might have been within their rights to refuse to accept the QDROs, when in fact, the Court stated that where a QDRO complies with REACT requirements, a Plan is not free to question the motives of the parties for pursuing a divorce. The Court also made the point that there was no "money" to get back as the only money paid out under the QDRO were accrued benefits to which the participants, and their spouses via the QDRO, were legally entitled. Most of the pilots are now suing Continental for wrongful termination.
Report this Comment
Add Your Comments...