Rohrbeck v. Rohrbeck
Decision Date | 06 December 1989 |
Citation | 318 Md. 28,566 A.2d 767 |
Parties | , 11 Employee Benefits Cas. 2253 Joan ROHRBECK v. John ROHRBECK. 56 Sept. Term 1989. |
Court | Maryland Court of Appeals |
Bryan Renehan (Cynthia Callahan, Ellen L. Lee, Brodsky, Greenblatt & Renehan, Chartered, all on brief) Gaithersburg, for appellant.
Allen J. Kruger (Alan S. Town, both on brief) Laurel, for appellee.
Argued before MURPHY, C.J., ELDRIDGE, COLE, RODOWSKY, McAULIFFE, ADKINS, JJ., and ALAN M. WILNER, (Associate Judge of the Court of Special Appeals of Maryland, Specially Assigned).
This case turns on whether the Circuit Court for Montgomery County entered a judgment--a final, appealable judgment--on July 13, 1988. It has a broader import than that, however, and requires an examination of the nature and function of a device unknown to our courts before 1985--the Qualified Domestic Relations Order (QDRO). The precise issue before us, and the answer to it, will become more clear if we begin with a discussion of this recent addition to our jurisprudence.
In 1974, Congress passed ERISA--the Employee Retirement Income Security Act of 1974 (P.L. 93-406, 88 Stat. 829)--in order to provide better protection for beneficiaries of employee pension and welfare benefit plans abounding in the private workplace. ERISA imposed a number of requirements on these plans relating to reporting and disclosure, vesting, funding, discontinuance, and payment of benefits. These requirements were imposed through amendments to both the Federal labor code (Title 29 U.S.C.) and the Internal Revenue Code (Title 26 U.S.C.). Some of the new statutory language was added to only one or the other of those codes; some was added to both codes to ensure that employers would not receive the tax benefits accorded by "qualified" plans unless those plans met the requirements imposed principally as a matter of Federal labor policy.
One of the provisions added to both codes was an anti-alienation requirement--a "spendthrift" provision precluding plan participants from assigning or alienating their benefits under pension plans subject to the Act. ERISA § 206(d)(1) added § 1056(d)(1) to Title 29 U.S.C., requiring that "[e]ach pension plan shall provide that benefits provided under the plan may not be assigned or alienated." ERISA § 1021(c) added a similar provision to the Internal Revenue Code. To the definition of "qualified trusts," it added the requirement that "[a] trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part provides that benefits provided under the plan may not be assigned or alienated." 26 U.S.C. § 401(a)(13). 1
ERISA § 514, which became part of the labor code (29 U.S.C. § 1144), and to which no counterpart was added to the Internal Revenue Code, provided, with exceptions not relevant here, that the basic requirements of ERISA ( ) "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan [subject to the ERISA requirements]." The term "State law," for purposes of § 514, includes "all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." ERISA § 514(c)(1); 29 U.S.C. § 1144(c)(1) (emphasis added). The preemption provision of ERISA has been regarded by the Supreme Court as "deliberately expansive, and designed to 'establish pension plan regulation as exclusively a federal concern.' " Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) (quoting in part from Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 1906, 68 L.Ed.2d 402 (1981)). See also Shaw v Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983).
The combination of the anti-alienation provision in both codes and the preemption provision of ERISA § 514 eventually raised a question, apparently not anticipated by Congress, as to the validity of orders entered in State domestic relations proceedings requiring that pension benefits be paid to a person other than the plan beneficiary. The question arose in two principal contexts--attachments served on plan administrators designed to enforce previously entered orders for child or spousal support, and orders entered pursuant to State community property or equitable distribution laws actually transferring pension rights.
Although the courts and the Internal Revenue Service apparently had little problem in giving effect to the first kind of order, there was more uncertainty about the second. While considering what eventually became the Retirement Equity Act of 1984 (P.L. 98-397, 98 Stat. 1433, hereinafter referred to as REA), however, Congress decided to clarify both aspects. The Congressional concern was clearly reflected in the various House and Senate Committee Reports on the REA. The House Ways and Means Committee Report noted the uncertainty caused by the anti-alienation and preemption provisions and stated, at 18:
The device created to achieve these ends is the QDRO. As further explained in both the House Ways and Means and Senate Finance Committee Reports:
H.Rep. No. 655 at 18; S.Rep. No. 575 at 19, U.S.Code Cong. & Admin.News 1984, pp. 2547, 2565 (emphasis added). 2
Because the anti-alienation requirement was part of both the labor and the tax codes, Congress amended both codes to provide for this limited exception. See REA § 104 (29 U.S.C. § 1056(d)) ; REA § 204 (26 U.S.C. §§ 401, 414) . Both provisions begin with the statement that the anti-alienation requirement "shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a participant pursuant to a domestic relations order, except that [it] shall not apply if the order is determined to be a qualified domestic relations order." (Emphasis added.)
REA §§ 104, 204; 29 U.S.C. § 1056(d)(3)(B)(ii); 26 U.S.C. § 414(p)(1)(B). It must then meet three other requirements:
(1) It must create or recognize the existence of an alternate payee's right to, or assign to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan, 29 U.S.C. § 1056(d)(3)(B)(i); 26 U.S.C. § 414(p)(1)(A);
(2) It must clearly specify:
29 U.S.C. § 1056(d)(3)(C); 26 U.S.C. § 414(p)(2); and
(3) It:
29 U.S.C. § 1056(d)(3)(D); 26 U.S.C. § 414(p)(3).
The law requires each plan to establish "reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under such qualified orders." 29 U.S.C. § 1056(d)(3)(G)(ii); 26 U.S.C. § 414(p)(6)(B). Upon receipt of a domestic...
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