105 KAR 1:190. Qualified domestic relations orders.

      RELATES TO: KRS 16.505-16.652, 61.510-61.705, 78.510-78.852

      STATUTORY AUTHORITY: KRS 61.645(9)(f)

      NECESSITY, FUNCTION, AND CONFORMITY: KRS 61.690(3) requires the retirement systems to honor qualified domestic relations orders which comply with the policy of the Board of Trustees established by this administrative regulation.

      Section 1. Definitions. (1) "Alternate payee" means an individual who is named in a qualified domestic relations order to receive a portion of the member's retirement benefits.

      (2) "Qualified domestic relations order" (QDRO) means a court order issued incident to an annulment, separation or divorce which establishes an alternate payee's rights to a portion of the member's benefit.

      Section 2. A QDRO shall be accompanied by a statement from counsel that the QDRO is current and not superseded by a subsequent QDRO and shall contain the following:

      (1) Certification by the clerk of the circuit court in which the QDRO was entered;

      (2) The name, Social Security number and last known mailing address of the member and the alternate payee;

      (3) The date of marriage and the date of decree of dissolution of marriage;

      (4) The correct name of the system or systems to which it applies;

      (5) If the member is retired, the percentage of the member's retirement allowance to be paid to the alternate payee or the specific amount to be paid to the alternate payee; and

      (6) If the member is not retired, the percentage to be paid to the alternate payee upon the member's retirement, death or withdrawal from the system and whether the percentage pertains to the benefits attributable to the period of marriage, the member's entire period of employment or other specified period.

      Section 3. If the retirement system determines that a QDRO does not meet the requirements of Section 2 of this administrative regulation, the retirement system shall do the following:

      (1) Notify the participant, alternate payee and their legal counsel, if known, that the QDRO is not in compliance and will not be followed and the necessary changes to be made to the QDRO to bring it into compliance.

      (2)(a) If the member is retired, the general manager shall direct the percentage or amount of benefits to be paid to the alternate payee, if determinable from the QDRO, to be withheld from the member's retirement allowance and placed in abeyance until the QDRO is amended.

      (b) If the QDRO is not amended to comply with this administrative regulation within eighteen (18) months from the date the QDRO was first received, the percentage or amount of the member's retirement allowance held in abeyance shall be restored to the member's account and paid to the member.

      (c) A QDRO or amended QDRO received after the close of the eighteen (18) month period and determined to be in compliance shall only be applied prospectively.

      Section 4. A QDRO shall not be effective until received by the retirement system and shall apply only to those monthly retirement allowances that have not been processed by the retirement system by the date of receipt.

      Section 5. If the QDRO is received prior to the member's retirement, then upon the member's retirement pursuant to KRS 61.590, the system shall notify the member and the alternate payee of the benefits payable under the QDRO which shall be calculated as follows:

      (1) The benefit payment shall be divided between the member and the alternate payee as follows: The alternate payee shall receive the amount computed by multiplying the basic option amount due the member by the percentage allocated to the alternate payee by the terms of the QDRO multiplied by a fraction, the numerator of which shall be the period of service specified in the QDRO and the denominator of which shall be the member's total service credit. The member shall be paid all amounts in excess of the amounts paid to the alternate payee.

      (2) If a lump sum payment equal to balance of the member's account is to be made, the percentage determined by this calculation shall be multiplied by the balance of the member's account and the result paid to the alternate payee. The member shall be paid all amounts in excess of the amounts paid the alternate payee.

      (3) If a monthly benefit is paid, the options made available to the alternate payee shall be derived from the member's basic option.

      (4) Service added for disability under KRS 61.605 or KRS 16.582 shall not be included in determining the amount payable to the alternate payee. Service credit purchased during the period of marriage shall be included in the calculation under this subsection.

      (5) The payment options offered to the alternate payee shall be based on the alternate payee's life expectancy. The alternate payee shall be offered the payment options described in KRS 61.635 which do not provide lifetime benefits to a beneficiary and, if the member's is eligible, the ten (10) year certain option as proved by KRS 16.576(5).

      (6) If the alternate payee predeceases the member after the member's retirement, a lump sum, determined actuarially, of the payments remaining to the alternate payee shall be paid to the alternate payee's estate.

      (7) The alternate payee shall receive a pro rata share of any increases given recipients under KRS 61.691.

      Section 6. (1) If the member dies prior to retirement and prior to the death of the alternate payee, the member's account shall be divided in accordance with the QDRO between the alternate payee and the beneficiary.

      (2) If the death benefit is a refund of the member's contribution account, the alternate payee shall only be offered a lump sum payment representing a portion of the member's account calculated in accordance with Section 5 of this administrative regulation.

      (3) If the death benefit is calculated under KRS 16.578 or 61.640, the alternate payee shall be allowed to choose a lifetime annuity, a sixty (60) month certain payment, a 120 month payment or an actuarial lump sum payment.

      Section 7. If the QDRO is received after the member's retirement, then the alternate payee shall receive the percentage or amount of the member's retirement allowance as stated in the QDRO until the benefit payable to the member or the member's beneficiary ceases under the terms of the payment option previously selected by the member or until the death of the alternate payee.

      Section 8. If the alternate payee dies prior to the member's death, retirement or withdrawal of account, no payment shall be made to the alternate payee.

      Section 9. When benefits become payable to the alternate payee, the retirement system shall establish a separate account for the alternate payee which shall consist of the alternate payee's pro rata share of the member's contributions, service and benefit. Once the alternate payee's account has been established, the alternate payee shall not be entitled to further benefits acquired by the member.

      Section 10. The payment options shall be offered to the alternate payee on an Estimate of Monthly Retirement Allowance, Form 6A-QDRO, dated July 1991, incorporated by reference. The form can be obtained from the Kentucky Retirement Systems at its office at 1260 Louisville Road, Frankfort, Kentucky between 8 a.m. and 4:30 p.m. Monday through Friday.  (18 Ky.R. 929; eff. 11-8-91; Am. 21 Ky.R. 1521; 1881; eff. 2-8-95.)