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“the right to * * * receive all or a portion of the benefits
payable with respect to a participant under a plan”. Sec.
414(p)(1)(A)(i). A DRO that allows or orders the plan
participant to withdraw funds from the plan and then pay them to
a payee only gives the payee a right to funds held by the plan
participant, not to benefits from a qualifying plan. To allow
such a DRO to qualify as a QDRO would be to ignore the plain
meaning of section 414(p).
Our reading of section 414(p)(1)(A)(i) comports with our
earlier decisions,2 the legislative history of the statute, and
section 402(e)(1)(A). The Senate report states that Congress
intended section 414(p) to provide a “limited exception” to the
spendthrift provisions of the Internal Revenue Code that would
apply “under certain circumstances * * * In order to provide
rational rules for plan administrators”. S. Rept. 98-575, at 19
(1984), 1984-2 C.B. at 456. We believe that Congress intended
that section 414(p) should be read narrowly so that plan
administrators can easily identify DROs as QDROs and accordingly
make distributions directly to the alternate payees as required
by the QDROs, which will prevent plan participants from
2 See Karem v. Commissioner, 100 T.C. 521, 526 (1993)
(holding that a consent judgment was not a QDRO in part because
the distribution was paid to the plan participant and not to his
former spouse); Bougas v. Commissioner, T.C. Memo. 2003-194
(noting that a QDRO should specify an amount to be paid by the
plan to an alternate payee).
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Last modified: March 27, 2008