By Zbranek H.B. No. 413
77R3009 KLA-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to qualified domestic relations orders.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle C, Title 1, Family Code, is amended by
1-5 adding Chapter 10 to read as follows:
1-6 CHAPTER 10. DOMESTIC RELATIONS ORDERS FOR
1-7 CERTAIN PENSION OR RETIREMENT PLANS
1-8 Sec. 10.001. DEFINITIONS. In this chapter:
1-9 (1) "Alternate payee" means a spouse, former spouse,
1-10 child, or other dependent of a member or retiree who is recognized
1-11 by a domestic relations order as having a right to receive all or a
1-12 portion of the benefits payable by a private pension or retirement
1-13 plan with respect to the member or retiree.
1-14 (2) "Domestic relations order" means a judgment,
1-15 decree, or order, including approval of a property settlement
1-16 agreement, that:
1-17 (A) relates to providing child support, spousal
1-18 maintenance payments, or marital property rights to a spouse,
1-19 former spouse, child, or other dependent of a member or retiree of
1-20 a private pension or retirement plan; and
1-21 (B) is made under a domestic relations law,
1-22 including a community property law of this state or another state.
1-23 (3) "Participant" means a member or retiree to whom
1-24 benefits are payable by a private pension or retirement plan.
2-1 (4) "Private pension or retirement plan" means an
2-2 ERISA-qualified employee benefit plan under the Employee Retirement
2-3 Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.). The
2-4 term includes a defined benefit plan or defined contribution plan,
2-5 but does not include a public pension plan provided or administered
2-6 by a public retirement system to an officer or employee of the
2-7 state or a political subdivision of the state or of an agency or
2-8 instrumentality of the state or a political subdivision of the
2-9 state.
2-10 (5) "Public retirement system" has the meaning
2-11 assigned by Section 804.001, Government Code.
2-12 (6) "Qualified domestic relations order" means a
2-13 domestic relations order that:
2-14 (A) creates or recognizes the existence of an
2-15 alternate payee's right or assigns to an alternate payee the right
2-16 to receive all or a portion of the benefits payable with respect to
2-17 a member or retiree under a private pension or retirement plan; and
2-18 (B) directs the private pension or retirement
2-19 plan to disburse benefits to an alternate payee.
2-20 Sec. 10.002. ACCEPTANCE OF CERTAIN DOMESTIC RELATIONS ORDERS
2-21 AS QUALIFIED DOMESTIC RELATIONS ORDERS REQUIRED. A plan
2-22 administrator for a private pension or retirement plan, or another
2-23 person acting in an equivalent capacity for the plan, shall accept
2-24 as a qualified domestic relations order, in lieu of any other
2-25 order, a domestic relations order that is substantially in the form
2-26 provided by Section 10.003.
2-27 Sec. 10.003. FORM OF DOMESTIC RELATIONS ORDER. A domestic
3-1 relations order may be in substantially the following form:
3-2 QUALIFIED DOMESTIC RELATIONS ORDER
3-3 This order is intended to meet the requirements
3-4 for a "qualified domestic relations order" relating to
3-5 a private pension or retirement plan (the "plan").
3-6 This order is an integral part of the decree of divorce
3-7 granted on ________ (insert date on which divorce was
3-8 granted).
3-9 1. This qualified domestic relations order
3-10 assigns a portion of the benefits payable under the
3-11 plan to _______________ (insert name of alternate
3-12 payee) in recognition of the marital rights of
3-13 __________________ (insert name of alternate payee) in
3-14 the benefits payable to _________________ (insert name
3-15 of participant) under the plan.
3-16 2. The participant in the plan is
3-17 _________________ (insert name of participant), whose
3-18 last known mailing address is __________________
3-19 (insert participant's mailing address), whose birth
3-20 date is _____________ (insert participant's birth
3-21 date), and whose social security number is
3-22 _____________ (insert participant's social security
3-23 number).
3-24 3. The alternate payee is __________________
3-25 (insert name of alternate payee), whose last known
3-26 mailing address is __________________ (insert alternate
3-27 payee's mailing address), whose birth date is
4-1 _____________ (insert alternate payee's birth date),
4-2 and whose social security number is ___________ (insert
4-3 alternate payee's social security number). The
4-4 participant and alternate payee were married on
4-5 _____________ (insert date of marriage).
4-6 4. As part of the just and right division of the
4-7 estate of the parties, the alternate payee is awarded a
4-8 portion of any benefits payable with respect to the
4-9 participant that the participant, or the participant's
4-10 designated beneficiary, surviving spouse, or estate,
4-11 may become entitled to receive from the plan as a
4-12 return of accumulated contributions or as any annuity
4-13 or other benefit that may become payable as a result of
4-14 the participant's participation in the plan.
4-15 (OPTION 1. (To be used if the divorce was
4-16 granted before the date of the
4-17 participant's retirement.)
4-18 The portion is computed by multiplying
4-19 ___________ (insert one-half or other proportionate
4-20 share of the community property interest) by a
4-21 fraction, the numerator of which is the amount of
4-22 credited service with the plan earned by the
4-23 participant between _____________ (insert date of
4-24 marriage) and the date the divorce was granted, and the
4-25 denominator of which is the amount of credited service
4-26 by the participant under the plan on the date the
4-27 divorce was granted, and multiplying that product by
5-1 the value of the benefit payable to the participant or
5-2 the participant's designated beneficiary, surviving
5-3 spouse, or estate by the plan, computed as of the date
5-4 the divorce was granted as if the participant were
5-5 eligible to receive the benefit on that date.
5-6 (OPTION 2. (To be used if the divorce was
5-7 granted after the date of the participant's
5-8 retirement.)
5-9 The portion is computed by multiplying
5-10 ____________ (insert one-half or other proportionate
5-11 share of the community property interest) by a
5-12 fraction, the numerator of which is the amount of
5-13 credited service with the plan earned by the
5-14 participant between _____________ (insert date of
5-15 marriage) and the date the divorce was granted, and the
5-16 denominator of which is the amount of credited service
5-17 by the participant under the plan, and multiplying that
5-18 product by the benefit payable to the participant or
5-19 the participant's designated beneficiary, surviving
5-20 spouse, or estate by the plan.
5-21 5. The award to the alternate payee under
5-22 Paragraph 4 of this order is subject to the rules
5-23 provided by this paragraph.
5-24 (A) This order may not be interpreted in any way
5-25 to require the plan to provide any type or form of
5-26 benefit or any option not otherwise provided under the
5-27 plan.
6-1 (B) This order may not be interpreted in any way
6-2 to require the plan to provide increased benefits
6-3 determined on the basis of actuarial value.
6-4 (C) This order may not be interpreted in any way
6-5 to require the plan to pay any benefits to an alternate
6-6 payee named in this order that are required to be paid
6-7 to another alternate payee under another order
6-8 previously determined to be a qualified domestic
6-9 relations order.
6-10 (D) This order may not be interpreted in any way
6-11 to require the payment of benefits to the alternate
6-12 payee before the retirement of the participant, the
6-13 distribution of a withdrawal of contributions to the
6-14 participant as authorized by the statutes governing the
6-15 plan, or other distribution to the participant required
6-16 by law.
6-17 (E) This order shall be interpreted to require
6-18 that, in the event of the participant's retirement
6-19 before normal retirement age, the benefits payable to
6-20 the alternate payee shall be reduced in a proportionate
6-21 amount.
6-22 (F) This order may not be interpreted to require
6-23 the designation of a particular person as the recipient
6-24 of benefits in the event of the participant's death, or
6-25 to require the selection of a particular benefit
6-26 payment plan or option.
6-27 (G) If, after the date the divorce was granted,
7-1 any future benefit increases are provided under or
7-2 required of the plan, the alternate payee shall receive
7-3 a proportionate part of the increase, unless such an
7-4 order would disqualify this order under the rules the
7-5 plan has adopted with regard to qualified domestic
7-6 relations orders.
7-7 (H) If, after the date the divorce was granted,
7-8 the amount of any benefit otherwise payable to the
7-9 participant is reduced by law, the portion of benefits
7-10 payable to the alternate payee shall be reduced in a
7-11 proportionate amount.
7-12 (I) If, as a result of the participant's death
7-13 after the date the divorce was granted, the plan pays
7-14 to the participant's estate, surviving spouse, or
7-15 designated beneficiaries an amount that does not relate
7-16 to the participant's length of employment or
7-17 accumulated contributions with the plan but is purely a
7-18 death benefit paid as a result of employment or retired
7-19 status at the time of death, no portion of that amount
7-20 is community property, and the alternate payee has no
7-21 interest in the death benefit.
7-22 (J) In lieu of paying the alternate payee the
7-23 interest awarded by this order, the plan may pay the
7-24 alternate payee an amount that is the actuarial
7-25 equivalent of:
7-26 (i) an annuity payable in equal monthly
7-27 installments for the life of the alternate payee; or
8-1 (ii) a lump sum.
8-2 (K) All payments to the alternate payee under
8-3 this order terminate on the earlier of the date of the
8-4 alternate payee's death or the date required as a
8-5 result of the retirement option selected by the
8-6 participant.
8-7 6. All benefits payable under the plan, other
8-8 than those payable to the alternate payee under
8-9 Paragraph 4 of this order, are payable to the
8-10 participant in the form and manner that the
8-11 participant, in the participant's sole discretion,
8-12 elects, subject only to the plan requirements.
8-13 7. The alternate payee is ordered to report any
8-14 retirement payments received on any applicable income
8-15 tax return and to promptly notify the plan of any
8-16 changes in the alternate payee's mailing address. The
8-17 plan is authorized to issue a Form 1099R or other form
8-18 required by the Internal Revenue Service on any direct
8-19 payment made to the alternate payee.
8-20 8. The participant is designated as constructive
8-21 trustee for receiving any retirement benefit under the
8-22 plan that is due the alternate payee but paid to the
8-23 participant. The participant is ordered to pay that
8-24 benefit directly to the alternate payee not later than
8-25 the third day after the date the participant receives
8-26 the benefit. All payments made directly to the
8-27 alternate payee by the plan shall be credited against
9-1 the funds required to be paid by this order.
9-2 SIGNED this _____ day of __________, ______.
9-3
9-4 ___________________________
9-5 JUDGE PRESIDING
9-6 APPROVED:
9-7 _____________________ ___________________________
9-8 Participant (Participant's counsel, if
9-9 applicable)
9-10 _____________________ ___________________________
9-11 Alternate payee (Alternate payee's counsel,
9-12 if applicable)
9-13 Sec. 10.004. FAILURE OF PLAN ADMINISTRATOR TO ACCEPT CERTAIN
9-14 QUALIFIED DOMESTIC RELATIONS ORDERS. (a) If a plan administrator
9-15 for a private pension or retirement plan, or another person acting
9-16 in an equivalent capacity for the plan, rejects a domestic
9-17 relations order substantially in the form provided by Section
9-18 10.003 in violation of Section 10.002, the alternate payee may
9-19 report the plan administrator or other person to the secretary of
9-20 state.
9-21 (b) On receipt of a complaint under Subsection (a), the
9-22 secretary of state shall determine, after notice and hearing,
9-23 whether the plan administrator or other person violated Section
9-24 10.002.
9-25 (c) On determining that the plan administrator or other
9-26 person violated Section 10.002, the secretary of state shall
9-27 prohibit the plan administrator or other person from engaging in
10-1 business in this state.
10-2 Sec. 10.005. CAUSE OF ACTION BY ALTERNATE PAYEE. A private
10-3 employer who provides a private pension or retirement plan to an
10-4 employee or retiree is liable in an action brought by an alternate
10-5 payee if:
10-6 (1) the plan administrator or other person acting in
10-7 an equivalent capacity for the private pension or retirement plan
10-8 violated Section 10.002 by rejecting a domestic relations order
10-9 substantially in the form of the order under Section 10.003; and
10-10 (2) as a result of the violation of Section 10.002,
10-11 the alternate payee incurred a pecuniary loss with respect to the
10-12 amount of the benefit payable to the alternate payee under the
10-13 private pension or retirement plan.
10-14 Sec. 10.006. DAMAGES. An alternate payee who prevails in a
10-15 suit under Section 10.005 may recover actual damages and reasonable
10-16 attorney's fees and costs.
10-17 SECTION 2. (a) This Act takes effect September 1, 2001.
10-18 (b) Chapter 10, Family Code, as added by this Act, applies
10-19 only to a domestic relations order submitted to a plan
10-20 administrator for a private pension or retirement plan or other
10-21 person acting in an equivalent capacity on or after the effective
10-22 date of this Act.