Certified Plan Sponsor Professional (CPSP) Practice Exam

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Who is responsible for determining the qualification of a domestic relations order under IRS rules?

  1. The plan administrator

  2. The plan sponsor

  3. The fiduciary council

  4. The legal department

The correct answer is: The plan administrator

The responsibility for determining the qualification of a domestic relations order (DRO) under IRS rules falls to the plan administrator. The plan administrator must ensure that any DRO meets the specific criteria set forth by the IRS to qualify as a qualified domestic relations order (QDRO). This includes reviewing the language of the order, confirming that it adheres to the plan's rules, and ensuring compliance with federal and state laws. The plan administrator plays a crucial role in interpreting and applying the plan's provisions to ensure that benefits are distributed correctly according to the order. This role requires a thorough understanding of the regulations surrounding the distribution of retirement plan assets in the event of a divorce or legal separation. By performing this duty, the plan administrator protects the interests of the participants and beneficiaries as well as the plan itself. The plan sponsor, while responsible for the overall management and decisions regarding the benefit plan, typically delegates the day-to-day operational tasks, including the interpretation of DROs, to the plan administrator. Other entities like the fiduciary council and the legal department may provide guidance or support, but the ultimate responsibility for determining a DRO’s qualification rests with the plan administrator.