Employers May Now Charge for QDRO Approval
In a little noticed change, the US Department of Labor issued a "field assistance bulletin" in May, 2003, that permits employers and administrators of ERISA-regulated defined contribution retirement plans (such as 401(k) plans) to charge QDRO processing expenses. The Wall Street Journal recently reported that one large plan administrator (Fidelity Investments) now charges for QDROs for 40 of its 200 plans for which Fidelity processes QDRO documents. The decision to charge is made by each individual employer.
Here is the text of the DOL "Field Assistance Bulletin" regarding QDRO/QMCSCO fees:
Qualified Domestic Relations Orders (QDROs) and Qualified Medical Child Support Order (QMCSOs) Determinations.
ERISA does not, in our view, preclude the allocation of reasonable expenses attendant to QDRO or QMCSO determinations to the account of the participant or beneficiary seeking the determination.
It should be noted that, pursuant to 29 CFR § 2520.102-3(l), plans are required to include in the Summary Plan Description a summary of any provisions that may result in the imposition of a fee or charge on a participant or beneficiary, or the individual account thereof, the payment of which is a condition to the receipt of benefits under the plan. In addition, § 2520.102-3(l) provides that Summary Plan Descriptions must include a statement identifying the circumstances that may result in the " . . . offset, [or] reduction . . . of any benefits that a participant or beneficiary might otherwise reasonably expect the plan to provide on the basis of the description of benefits . . ." These requirements are intended to ensure that participants and beneficiaries are apprised of fees and charges that may affect their benefit entitlements.
The views expressed herein supersede the views expressed in AO 94-32A.
