Can a DRO include benefits that are not provided by the plan?

A Domestic Relations Order (DRO) is a legal order related to divorce or legal separation that can dictate how retirement benefits, typically from a 401(k) plan, are divided between parties. The key aspect of a DRO is that it can only direct the division of benefits that are actually available under the specific retirement plan.

The rationale behind this limitation is that a DRO operates within the framework of the plan's governing documents and applicable laws. Therefore, if the plan does not provide a certain type of benefit, that benefit cannot be included in the DRO. For instance, if a plan does not offer survivor benefits or has specific limitations on the types of distributions available, a DRO cannot mandate the plan to provide or modify these benefits.

This strict adherence to the benefits available in the plan ensures consistency and rights protection for both the participant and the alternate payee. It also avoids potential conflicts that could arise from trying to enforce a division of benefits that the plan simply does not accommodate.

In contrast, considerations of other options reflect varieties of benefits or future benefits which are outside the defined remit of what a DRO can stipulate, reaffirming the clear boundaries set by the plan’s provisions.