Certified Plan Sponsor Professional (CPSP) Practice Exam

Who is responsible for determining if a domestic relations order is qualified?

1. The plan sponsor

2. The plan administrator

3. The IRS

4. The beneficiary

The correct answer is: The plan administrator

The plan administrator is responsible for determining if a domestic relations order (DRO) is qualified. This role involves reviewing the DRO to ensure it meets the necessary legal requirements set forth by federal law, particularly the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC). The plan administrator’s duty is key because they are tasked with interpreting plan documents and ensuring compliance with applicable regulations. They are the point of contact for the plan and are responsible for deciding how the plan will be administered in light of the terms laid out in the DRO. In contrast, while the plan sponsor may establish the plan and has general oversight, it is the plan administrator who holds the responsibility for the specific qualification of DROs. The IRS does not assess individual DROs for qualification but rather sets forth the framework and guidelines that need to be followed. Similarly, beneficiaries do not hold the authority to determine the qualification of a DRO; their rights are derived from the outcome of such determinations made by the plan administrator.