(October 23, 2014) We have noticed a marked increase in the volume of requests for information as a result of divorce proceedings among members of Length of Service Awards Programs (LOSAP). As a result, we hope that our LOSAP Sponsors will find the following information beneficial.
A domestic relations order (DRO) is a judgment, decree or order that is drafted in accordance with state domestic relations law (including community property law). These orders will typically outline provisions for marital property rights for the benefit of a spouse, former spouse, child or other dependent.
Generally, a state authority (typically a court) must issue a judgment, order or decree or otherwise formally approve the property settlement agreement before it can be a domestic relations order. The mere fact that a property settlement is agreed to and signed by the parties will not, in and of itself, cause the agreement to be a domestic relations order.
We suggest that you consult with legal counsel to determine whether or not it is in the best interests of your organization to accept DROs and allow your LOSAP to be used as a means to marital settlements. Marital settlements (and in particular DROs), will typically require a great deal of attention on the part of the Sponsor and will likely result in unexpected plan expenses associated with reviewing, responding to, and carrying out what is outlined in a DRO. After consulting with legal counsel as to what may be best for your organization, it is always a good idea to develop a written policy to follow when the situation presents itself.