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QDRO, are not taxable to the plan participant, but are instead,
taxable to the former spouse/alternate payee as if he or she were
the plan participant.4 Conversely, a domestic relations order
that fails to satisfy the requirements of section 414(p) is not a
QDRO, and, consequently, the exception provided in section
402(a)(9) is inapplicable to such orders. In such a situation,
any distribution made from the plan will be taxable to the plan
participant under section 402(a)(1).
In the instant case, respondent finds herself in a
precarious position, between two former spouses of whom one is a
party to this litigation, the other is not. The question in
dispute is which of the former spouses ultimately will be liable
for the tax attributable to the subject distributions. The
eventual resolution of the QDRO issue will determine whether
4 Sec. 401(a)(13)(A) was added by the Employee Retirement
Income Security Act of 1974 (ERISA), Pub. L. 93-406, sec.
1021(c), 88 Stat. 829, 935, to require tax-qualified plans to
provide "that benefits provided under the plan may not be
assigned or alienated". ERISA, sec. 514(a), 29 U.S.C. sec.
1144(a) (1988), provides that the labor title of ERISA preempts
State law. Consequently, after the enactment of ERISA, it was
unclear whether this preemption provision applied to prohibit the
attachment or assignment of pension plan benefits under State
community property and family support laws. Congress enacted the
Retirement Equity Act of 1984 (REA), Pub. L. 98-397, 98 Stat.
1426, to clarify the application of ERISA antialienation
provisions to State family support laws and community property
laws. See S. Rept. 98-575, at 19 (1984), 1984-2 C.B. 447, 456.
REA provided new rules for the treatment of certain domestic
relations orders, requiring the distribution of all or part of a
participant's benefits under a qualified plan to an alternate
payee. Sec. 204(b) of REA, 98 Stat. 1445, added sec. 414(p),
which defines a QDRO. Sec. 401(a)(13)(B) provides that the
creation, recognition, or assignment of an alternate payee's
right to plan benefits under a QDRO does not violate the
antialienation provisions of ERISA and sec. 401(a)(13)(A).
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