Franklin & Marshall - Procedures for Determining Qualified Status of a Domestic Relations Order

Procedures for Determining Qualified Status of a Domestic Relations Order

As a general rule, the Franklin & Marshall College Retirement Plan is prohibited by law from recognizing any attempt to assign or alienate the benefit of any Participant under the Plan. However, in accordance with Section 206(d)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), the Plan must, as required by law, observe the terms of any “qualified domestic relations order”.

A domestic relations order ("Order") is any judgment, decree, or order (including approval of a property settlement agreement) which relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child or other dependent of a Participant, and is made pursuant to a state domestic relations law, including a community property law. For an Order to be “qualified”, it must satisfy the requirements of Section 206(d)(3) of ERISA.

The following procedures have been adopted by Franklin & Marshall College ("College"), as Plan Administrator, for the purpose of determining whether an Order complies with such requirements. These procedures will be furnished, upon receipt of an Order, to the persons specified in such Order as being entitled to payments under the Plan or, upon request, to any employee covered under the Plans, eligible spouse, or any interested party who may be entitled to receive payments under the Plans. In addition, any such person may designate a representative to receive copies of these procedures and all other pertinent correspondence related to the Order by writing to Franklin & Marshall College, Attn: Human Resources, P.O. Box 3003, Lancaster, PA 17604-3003.

Notice of Receipt

Upon receipt of an Order, the College, TIAA, or the College’s authorized designee shall notify, in writing, the Participant and Alternate Payee(s) of receipt of the Order. This notice to the Participant and Alternate Payee(s) shall acknowledge receipt of the Order and include a copy of these procedures.

Plan Designation

The Order must specify that it applies to payments under the Plan.

Designation of Alternate Payee

The Order must designate an eligible Alternate Payee(s). An Alternate Payee(s) is the person designated in the Order to receive all or a portion of the benefits payable to a Participant under the Plan. The Alternate Payee(s) must be the Participant's spouse or former spouse, the Participant's child, or another dependent of the Participant. The Order must include the name, mailing address, and Social Security Number of the Participant and the Alternate Payee(s) to be covered under the Plan.

Specification of Entitlement

The Order must address several issues related to the payment of benefits:

1. The Order must create or recognize the existence of an Alternate Payee's(s) right to, or assign to an Alternate Payee(s) the right to, receive all or a portion of the benefits payable with respect to a Participant under the Plan.

2. The Order must specify the amount or percentage of the Participant's benefits to be paid by the Plan to such Alternate Payee(s), or the manner in which such amount or percentage is to be determined.

3. The Order must specify the number of payments or period to which such Order applies.

4. The Order must address what will happen to the benefit awarded to the Alternate Payee(s) in the event of the Participant's death prior to the commencement of benefits to the Alternate Payee(s).

5. The Order must specify when benefits are to commence to the Alternate Payee(s).

Limitations

The Order will not be qualified if it provides for:

(i) benefits which exceed the benefits which would otherwise be paid under the Plans, or

(ii) a form of benefit payment or an option not otherwise provided under the Plan.

The Order may not grant the payment of benefits to the Alternate Payee(s) which are required to be paid to another individual under an Order previously determined to be a qualified Order.

The Order may not grant the Alternate Payee(s) the right to receive a loan or hardship withdrawal under the Plan.

If the Participant has not yet separated from service, the Order must conform to the following:

1. The Order must specify the date on which payment of benefits is to be made to the Alternate Payee(s), which may be on or after the date on which the Participant attains (or would have attained) the “earliest retirement age” under the Plan.

The "earliest retirement age" is defined in ERISA Section 206(d)(3)(E) as the earlier of:

(i) The date on which the Participant is entitled to a distribution under the Plan; or

(ii) The later of the date the Participant attains age 50 or the earliest date on which the Participant could begin receiving a distribution under the Plan if the Participant separated from service.

2. Payment to the Alternate Payee(s) shall be made as if the Participant had retired on the date on which such payment is to begin under the Order to the extent that it does not violate the terms of the Plan (but taking into account only the present value of benefits actually accumulated, and not taking into account the value of any employer subsidy for early retirement unless specified under the Order).

The Order may not require the Plan to alter or revise the form of payment and beneficiary elections of a Participant who has already entered pay status at the time the Order is determined to be qualified.

(The Alternate Payee is considered a terminated Plan participant. Based on current regulations, the Alternate Payee will pay normal income tax when funds are withdrawn from his/her retirement account, but will not pay a 10% early withdrawal penalty tax if a distribution is taken prior to the Alternate Payee attaining age 59-1/2. The Alternate Payee is advised to consult with a tax professional before initiating a withdrawal.)

Non-vested Participants

A Participant may accrue a benefit under the Plan but forfeit it on account of termination of employment before meeting the vesting requirements of the Plan. No payments will be made to an Alternate Payee(s) with respect to any forfeited benefits.

Multiple Qualified Domestic Relations Orders

Orders will be honored in the priority in which the final form thereof is received. Any reference in an Order to a Participant's benefit will be deemed to refer to the Participant's benefit net of any amounts payable to an Alternate Payee(s) under a previously received Order.

Interim Administration

The Plan Administrator or TIAA will review any Order submitted to it and determine, in accordance with these procedures and within a reasonable period of time, whether the Order is qualified. During any period in which the issue of whether the Order is qualified is being determined (by the Plan Administrator, TIAA, by a court of competent jurisdiction, or otherwise), the Plan Administrator or his/her delegate shall, pursuant to ERISA Section 206(d)(3)(H), separately account for the amounts (hereinafter the "segregated amounts") that would have been payable to the Alternate Payee(s) during such period if the Order had been deemed to be qualified.

When the Plan Administrator or TIAA determines whether an Order is qualified, it will appropriately notify all persons named in the Order, in writing, stating either that the Order is qualified or the reasons why the Order fails to be qualified. If none of such persons dispute, in writing, such determination within 60 days of such notification, such determination will be deemed to be final.

If payments are due to be made to a Participant named in an Order before a final determination is made by the Plan Administrator or TIAA that an Order is qualified, such payments will be reduced as though the Order were a qualified Order. Further, no payments will be made to the Alternate Payee(s) until such final determination has been made.

If no final determination is made within 18 months of the date on which the first payment would be required to be made under an Order, payments to the Participant will be made as though the Order is not qualified and had never been qualified. Any payments withheld from a Participant during such 18 month period will be paid to the Participant. If subsequent to this 18 month period, the Order is deemed to be qualified, payments to the Alternate Payee(s) will be made only from the point of final determination forward.

(A sample domestic relations order may be accessed from the TIAA web site.)