Some retirement plans that are required to honor certain domestic relations orders publish suggested model orders for use by order preparers. They do this for the following reasons:

1. Model orders simplify the plan’s task of determining the validity of proposed orders. This is especially important where the plan’s order reviewers are not especially knowledgeable about the many variations of domestic relations orders used to divide retirement benefits.
2. Model orders tend to promote provisions that the plan favors (for example, due to administrative simplicity) rather than provisions that may better reflect the parties’ intent (especially with respect to protection of the alternate payee’s full interest in the event of the participant’s prior death).
3. Some model orders are drafted to favor plan participants (who are current or former employees of the plan sponsor) rather than alternate payees (who never were employees of the plan sponsor).
4. Order preparers who are not especially knowledgeable appreciate the fill-in-the-blank simplicity of model orders and increased likelihood (or virtual certainty) of plan acceptance.

Why PDQ, L.L.C. Does Not Generally Use Model Orders. We generally do not use model orders for the following reasons:

1. Our fee structure and efficiency are based upon our familiarity with the order provisions we have drafted and the consistent format we use. We prepare orders for hundreds of different plans and it would be very inefficient for us to have to become familiar with different model orders for such a wide variety of plans. Our fees would increase if we used model orders.
2. The provisions in our orders are precise, unambiguous and understandable. Model orders vary considerably in this regard. Many models contain provisions that are unclear or don’t address key issues that should be addressed.
3. Unlike some model orders, our orders are prepared to reflect the parties’ intent (especially with respect to protection of the alternate payee’s full interest in the event of the participant’s prior death) rather than provisions that the plan favors.
4. Our orders attempt to preserve the maximum flexibility for the parties. Some model orders require the alternate payee to make irrevocable decisions years before those decisions are necessary and years before the participant is required to make similar decisions.

If the parties direct us to use a model order rather than our own order, we will comply with that instruction but our fee will be higher than we charge for our own order and the resulting order will not be as good as our own order. In addition, we may need to make extensive revisions to the model that may eliminate the increased likelihood of plan acceptance generally associated with the use of the plan’s model order.

The Value of Model Orders to PDQ, L.L.C. Although we generally don’t use model orders for the reasons previously discussed, we still appreciate being provided any model orders you may have. Sometimes the only information we get about a plan’s unusual provisions or domestic relations order policies is gleaned from the plan’s model order or the accompanying instructions. Even though we may not use the model order per se, the information from the model order may alert us to a situation that requires us to alter the order we would otherwise prepare.

Plan Acceptance of Domestic Relations Orders. There is no guarantee that the plan will accept any order as a valid order. Obviously, using a plan’s model order in accordance with the plan’s instructions should virtually guarantee plan acceptance of that order. We believe that advantage of model orders is more than offset by the previously discussed disadvantages of model orders. Some order reviewers practically insist upon the use of the plan’s model order for order approval. This is not only unfair to the parties and a clear sign of the order reviewer’s lack of expertise, but it also clearly violates governmental policy. The Department of Labor has published written guidance which states, "Plan administrators are required to honor any domestic relations order that satisfies the requirements to be a QDRO…a plan may not condition its determinations of QDRO status on the use of any particular form." Plan reviewers who are not qualified to be plan reviewers and who do not adhere to clear governmental directives and pronouncements should be replaced by competent reviewers who respect the law and associated governmental guidance.

PDQ, L.L.C. hopes this explanation will be helpful to the parties and their attorneys. PDQ, L.L.C. is not a law firm and this explanation is not intended as nor should it be construed as legal advice. If you are not an attorney, we recommend you discuss this material with your attorney. We understand how difficult and trying the divorce process can be without additional complications relating to the division of retirement benefits. The parties should understand that those complexities are unavoidable legal requirements imposed by governing law and not by the attorneys or PDQ, L.L.C. If you have any questions about this material or if PDQ, L.L.C. can assist you in any way, please feel free to contact us.

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