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.