Are Reversions in QDRO Negotiable?

Are Reversions in QDRO Negotiable?
The attorneys and the parties should take care in negotiating the reversion of the unclaimed benefits from retirement plans which have been awarded in the divorce judgment. There are occasions when it may be reasonable or equitable to have the unclaimed benefits revert to the plan participant on the alternate payee’s death.
For instance, if the alternate payee is suffering from a serious or terminal illness when the divorce judgment is entered; when the participant has agreed to pay a disproportionate share of the marital debt; when the participant has agreed to pay for post-secondary educational expenses for the parties children; when the participant will bear the full financial burden of raising the parties’ minor children after death of the alternate payee; when the parties have no children or other heirs; when the participant is or will be responsible for the care of another, such as an adult disabled child or an aged parent, after the death of the alternate payee.
Whether or not an alternate payee’s award may revert to the plan participant on death of the alternate payee will depend on the plan’s rules (the court may not order the plan to offer a benefit otherwise not available under the plan’s rules) and on the type of benefit the parties agree to use in the settlement agreement/divorce judgment and the Qualified Domestic Relations Order.
If the alternate payee predeceases the participant and the shared payment method of division was chosen (the alternate payee’s benefit was based on the participant’s lifetime), then the death of the alternate payee will always result in a reversion to the participant, whether the alternate payee’s death occurs before the payment starting date or after the payment starting date, which is generally the date pension payments begin to either party.
If the alternate payee predeceases the participant and the separate interest method of division was chosen (the alternate payee’s benefit is based on the alternate payee’s own lifetime), then there is a reversion to the participant only if the alternate payee dies before the annuity payment starting date. The reason for this is after the annuity payment starting date, the alternate payee’s benefit has been carved out as a separate interest for the alternate payee.
After the commencement of payment of benefits, the disposition of the alternate payee’s benefit upon death depends on the form of benefit chosen the by the alternate payee, unless the plan provides no form other than a single life annuity, in which case the alternate payee’s benefit is a single life annuity and simply ceases entirely upon the alternate payee’s death.
Some plans use a totally severed approach to separate interest QDROs and in that case, the Plan regards the assignment to the alternate payee as complete upon approval of the QDRO and there would not be a reversion either before or after the annuity starting date.
Sources for Materials:
Michigan Family Law, Sixth Edition, 2010 Supplement—ICLEChapter 10—Judgments and Post-trial Procedures—Judith A. CurtisChapter 15—Property Division—Diana RaimiChapter 16—Division of Retirement Benefits—George L. Whitfield and Sue O’Conway
Michigan Estate Planning Handbook, Second Edition—ICLE
Articles posted at http://www.qdroteam.com/ by Robert Treat, Hantz Consulting, LLC, dba QDRO Express, LLC, 22601 Allen Road, Suite 100, Woodhaven, MI 48183, with permission
United States Department of Labor (obtain the summary plan description)EBSA Public Disclosure Room N-1513200 Constitution Avenue, NWWashington, DC 20210
State of MichiganOffice of Retirement Services—Eligible Domestic Relations Orders, Understanding Recoupment.www.michigan.gov/ors..... HTTP://WWW.ATTORNEYBANKERT.COM