In Oregon, Laws Pertaining to Divorce and 457 Deferred Compensation Benefits

The Oregon Savings Growth Plan, a 457 Deferred Compensation Plan, can pay benefits to an alternate payee according to OregonRevised Statutes (ORS) 243.507 and Oregon Administrative Rules (OAR) 459, Division 050.  These statutes and rules allow the Oregon Savings Growth Plan to pay an alternate payee that which would otherwise be paid to an eligible employee if, and to the extent, expressly provided for in the terms of any court decree of annulment, dissolution of marriage or of separation, or the terms of any court order or court-approved property settlement agreement incident to any court decree of annulment or dissolution of marriage or of separation.  Any payment under this subsection to an alternate payee bars recovery by any other person.

Under IRC section 457 a deferred compensation plan must receive copies of the final court documents that have been signed by a judge with proof of the decree being filed in court. The Oregon Savings Growth Plan office must approve the court documents as a Qualified Domestic Relations (QDRO) before separating funds or making payments to an alternate payee.  A draft decree may be reviewed by the Oregon Savings Growth Plan for compliance prior to submission to a court.

The final court order or judgment must clearly specify the amount awarded to an alternate payee from the participant’s deferred compensation account, and the language must be administrable under ORS Chapter 243.507 and OAR Chapter 459, Division 050.  The final court order is subject to the requirements of the Internal Revenue Code and Oregon law.

ORS 243.507 allows the Oregon Savings Growth Plan to divide benefits and make distributions to the alternate payee. Distributions to an alternate payee may commence prior to the time a participant retires or terminates employment if early distribution is specifically stated in the decree of divorce or domestic relations order but must commence no later than the alternate payee’s required beginning date of April the year following the year the alternate payee turns 70 ½ in accordance with IRC 401(a)(9), ORS 243.507, and OAR Chapter 459, Division 050. The alternate payee may elect to receive payment in any manner available to the employee under the deferred compensation plan without regard to the form of payment elected by the employee as long as the participant’s severance from employment occurs before distribution begins.