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Discussion
I. Qualified Domestic Relations Orders
Under sections 401(a) and 402(a), funds distributed from a
qualifying profit sharing plan are taxable to the distributee,
who is the participant or beneficiary entitled to receive the
distribution under the plan. Darby v. Commissioner, 97 T.C. 51,
58 (1991). Section 402(e)(1)(A) contains an exception to this
rule, and provides: “an alternate payee who is the spouse or
former spouse of the 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)).” The parties agree that the Plan is a
qualifying profit sharing plan under section 401(a) and the Order
is a domestic relations order (DRO) under section 414(p)(1)(B).
A DRO qualifies as a QDRO only if it: (1) Creates or
recognizes the existence of an alternate payee's right to, or
assigns to an alternate payee the right to, receive all or a
portion of the benefits payable with respect to a participant
under a plan; (2) clearly specifies certain facts; and (3) does
not alter the amount or form of the plan benefits. Sec.
414(p)(1)-(3). In addition, the DRO must be presented to the
plan administrator, who must determine whether it is a QDRO.
Sec. 414(p)(6); Rodoni v. Commissioner, 105 T.C. 29, 35 (1995);
Karem v. Commissioner, 100 T.C. 521, 526 (1993). Finally, under
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Last modified: March 27, 2008