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generally provides for current taxation of distributions as
ordinary income.
The Code does not define the word “distributee” as used in
section 402(a); neither do the regulations. The Court has
concluded that a distributee of a distribution under a plan
ordinarily is the participant or beneficiary who, under the plan,
is entitled to receive the distribution. See Darby v.
Commissioner, supra at 58; Estate of Machat v. Commissioner, T.C.
Memo. 1998-154; Smith v. Commissioner, T.C. Memo. 1996-292.
Section 402(e)(1)(A), however, provides an exception to this
general rule. Section 402(e)(1)(A) provides that an “alternate
payee” who is the spouse or former spouse of the plan participant
shall be treated as the distributee of any distribution or
payment made to the “alternate payee” under a “qualified domestic
relations order” as defined in section 414(p). Therefore, a
distribution made to such an alternate payee under a QDRO will be
taxable to the alternate payee, and not to the plan participant,
because section 402(e)(1)(A) treats the alternate payee as the
distributee.
The Retirement Equity Act of 1984 (REA), Pub. L. 98-397,
sec. 204(b), 98 Stat. 1445, added section 414(p), which defines a
QDRO. Section 414(p) provides, in pertinent part, the following:
SEC. 414(p). Qualified Domestic Relations Order Defined.--
For purposes of this subsection and section 401(a)(13)--
(1) In general.--
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Last modified: May 25, 2011