The prohibition against nonalienation of benefits does not apply to an assignment of a benefit under a qualified domestic relations order (QDRO). Under Code Section 414(p), a QDRO is a decree, order, or property settlement under state law relating to child support, alimony, or marital property rights that assigns a participant's plan benefits to a spouse, former spouse, child, or other dependent of the participant. Currently, therefore, a participant's plan benefits generally become the subject of negotiation in domestic disputes. The pension law itself does not indicate how such benefits are to be divided; this is still a matter of state domestic relations law. The QDRO provision simply provides a means by which state court orders in domestic relations issues can be enforced against plan trustees.
To protect plan administrators and trustees from conflicting claims, a QDRO cannot assign a benefit that the plan does not provide. Also, a QDRO cannot assign a benefit that is already assigned under a previous order. If, under the plan, a participant has no right to an immediate cash payment from the plan, a QDRO cannot require that the trustees make such a cash payment. If a cash settlement is desired, the parties will generally agree to allow one participant to keep the entire plan benefit and pay compensating cash to the other.
