Certified Plan Sponsor Professional (CPSP) Practice Exam

Who can be designated as an "alternate payee" through a Qualified Domestic Relations Order (QDRO)?

1. Only spouses

2. Only children

3. All relevant parties specified in the QDRO

4. Dependent relatives only

The correct answer is: All relevant parties specified in the QDRO

An "alternate payee" in the context of a Qualified Domestic Relations Order (QDRO) is defined broadly to include any individual who is designated to receive a portion of the retirement benefits of a plan participant. This designation can encompass a variety of parties as specified in the QDRO, which typically includes not just current or former spouses, but also children and other dependents. The flexibility of the QDRO allows for multiple types of beneficiaries, reflecting the diverse family and financial circumstances that may necessitate such arrangements. For instance, it can be used to designate children or even dependent relatives as alternate payees depending on the specific terms laid out in the order. Therefore, since the answer identifies that all relevant parties specified in the QDRO can be designated as alternate payees, it accurately captures the expansive scope allowed under these legal frameworks. This understanding is crucial for plan sponsors and administrators who need to ensure compliance with QDRO requirements and the distribution of benefits according to these orders.