Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE

As many employers know, HIPAA rules require them to sign on behalf of their health plans Business Associate Agreements (BAAs) with the vendors who assist in plan administration. Many employers also know that earlier this year, the U.S. Department of Health and Human Services issued final regulations which will require updated BAAs by September 23, 2013 or September 23, 2014, depending on the circumstances. Among the plans covered by these rules are medical flexible spending accounts, other than plans that are self-administered and have fewer than 50 participants.

My colleague Blake Schofield recently published an Insight article for clients of our firm regarding the new requirements for BAAs. Employers needing to update their BAAs may find it of interest.

My colleague Jeff Cairns recently blogged about a proposed regulation of the Department of Labor (DOL) that will require employers to include on plan statements estimates of the lifetime annuity amount that a participant’s 401(k) balance could buy. The DOL believes this information will help participants plan for retirement. Also to help participants plan for retirement, the DOL, the Social Security Administration and the Department of Health and Human Services have recently published a Retirement Toolkit that includes a list of government publications and interactive tools about retirement planning. The tool includes information on Medicare and Social Security benefits. Regardless of what happens to the DOL’s regulation project, employers could choose to publicize the availability of this tool to aid employees in their retirement planning.

As many of our readers know, on Tuesday, May 14, 2013, Minnesota became the twelfth state to recognize same sex marriages.  The effective date of the change is August 1, 2013, which gives employers some time to react to the change and analyze its effect on their employment policies and benefits.  We sent an Alert to our clients about the effect of this change on employers that I think may also be of interest to readers of this blog.  The Alert is linked here.

Various promoters have suggested to entrepreneurs that they use the assets in their 401(k) plans or IRAs to finance a new business. These programs are sometimes known by the acronym ROBS, or Rollovers as Business Start-ups. The basic structure involves the entrepreneur’s rollover from a prior employer of the amount in his or her qualified plan to an IRA or a 401(k) plan to be established by the new business. The IRA or qualified plan then uses the rollover money to purchase the business, such as a franchise operation. The IRS has cautioned taxpayers that there are many requirements that must be met for this structure to work and also emphasizes that it is risky for business owners to invest all their retirement savings in a start-up business since new businesses fail at a high rate and any failure will result in the loss of both the business and the employee’s retirement assets.

A recent tax court opinion highlights the importance of meeting all legal requirements with these arrangements. The tax court decision involved two individuals who formed a corporation and directed their IRAs to use amounts rolled over from a prior employer’s plan to purchase 100% of the corporation’s newly issued stock. The cash was then used to purchase the assets of a business. The cash in the IRAs was not sufficient to finance the transaction so the company borrowed money from various sources, one of which was a note to the seller, personally guaranteed by the individuals whose IRAs owned the stock of the company. After the transaction was complete, the individuals owned the IRAs and the IRAs owned 100% of the stock of an employer that was now operating a business. The business owed money to the seller of the assets used in the business and the individual IRA owners had personally guaranteed that debt.

The individuals later converted their IRAs from traditional IRAs to Roth IRAs. The business was sold a few years later and the individuals assumed that the gain on the sale would be tax free when received by the Roth IRAs and tax free when distributed to the individuals who owned the Roth IRAs. (If appropriate holding periods are met, amounts distributed from Roth IRAs are not subject to income tax.)

The IRS challenged the tax treatment, claiming that the personal guarantees by the IRA owners of the note to the seller constituted an indirect loan to the IRA itself. Under the tax code, any extension of credit “directly or indirectly” between an IRA and its owner constitutes what is known as a prohibited transaction. An IRA that engages in a prohibited transaction is treated as having lost its IRA status in the year in which the transaction occurs. The IRS claimed that the IRAs lost their status as tax free IRAs in the year in which the personal guarantees were given and that that status continued for every year in which the personal guarantees remained outstanding. Thus, at the time the business was sold, the IRAs no longer qualified as IRAs and the owners of the IRAs had to recognize the capital gain incurred on the sale.

In addition to having to pay the capital gains taxes, the owners were also hit with penalties for failure to properly report their income. The owners claimed that they relied upon their business advisors regarding the structure of the transaction and the appropriate tax treatment. The IRS noted that the promotional materials from the advisor warned the owners to avoid engaging in prohibited transactions with their IRAs. The tax court noted that the owners did not discuss the personal guarantees with the advisor and in any case the advisor was the promoter of the arrangement so was not an independent advisor upon whose advice the owners could rely to avoid penalties.

ROBS can also be structured using a rollover to the 401(k) plan of the new business. Those arrangements too are subject to the prohibited transaction rules. With 401(k) plans, however, instead of the plan losing its tax exempt status, those responsible for the prohibited transaction are required to pay excise taxes. The amount of the excise tax is 15% of the amount involved for each year or part of a year that a prohibited transaction is not corrected. Ultimately, an uncorrected prohibited transaction can be subject to a 100% excise tax.

Taxpayers wanting to use their qualified plan or IRA assets to fund a new business must be especially careful in arranging financing for that new business. In light of this case, taxpayers may need to avoid personal guarantees of additional funding sources. Taxpayers should work closely with qualified advisors and may find that a different source of financing is ultimately a better choice than a ROBS.

On May 8, 2013, the Department of Labor (DOL) issued long-awaited temporary guidance and a model notice to be provided to employees about upcoming coverage options through the health care exchange, known as the Marketplace, established as a part of the health care reform legislation. This notice was originally supposed to be provided to employees by employers on March 1, 2013, but the DOL delayed the effective date until October 1, 2013 to coordinate with IRS guidance on minimum value.

Section 18B of the Fair Labor Standards Act (FLSA), added by section 1512 of the Patient Protection and Affordable Care Act, generally provides that an applicable employer must provide each employee at the time of hiring (or with respect to current employees, not later than October 1, 2013) with a written notice about the Marketplace.

Applicable employer. The Marketplace notice requirement applies to employers to which the FLSA applies – in general, employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most companies/organizations, a test of not less than $500,000 in annual dollar volume of business applies. The FLSA also specifically covers hospitals; institutions primarily engaged in care of the sick, aged, mentally ill or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools; institutions of higher education; and federal, state and local government agencies.

The Wage and Hour Division of the DOL has a tool to determine applicability of the FLSA.

Notice must be provided to all employees of an applicable employer. Employers must provide the notice to each employee, regardless of health plan enrollment status or part- or full-time status. Employers are not required to provide a separate notice to dependents or others who may become eligible for coverage under the health plan but who are not employees.

Notice Requirements. The notice must:

  • ·         Include information about the existence of the Marketplace,
  • ·         Include contact information and a description of the services provided by a Marketplace,
  • ·         Include information about the manner in which the employee may contact the Marketplace to request assistance,
  • ·         Inform the employee that he or she may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Marketplace, and
  • ·         Include a statement informing the employee that if the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

Model language is available on the DOL’s website.

The DOL provides a model notice for employers who do not offer a health plan, and another model notice for employers who offer a health plan to some or all employees.  Employers may use one of these models, as applicable, or a modified version, as long as the notice meets the content requirements listed above.

Providing the notice to new hires.  Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013 (or within 14 days of an employee’s start date).

Providing the notice to current employees.  For employees who are employed before October 1, 2013, the employer is required to provide the notice not later than October 1, 2013. The notice is required to be provided automatically, free of charge.

Manner of providing the notice. The notice must be provided in writing in a manner calculated to be understood by the average employee.  It may be provided by first class mail or electronically if the requirements of the DOL’s electronic disclosure safe harbor are met – that safe harbor generally requires an employee to access a computer as part of the employee’s job duties.

Model COBRA election notices. The DOL also updated its model COBRA notices that health plans may use to satisfy the requirement to provide an election notice under COBRA. Among other reasons, the notice was revised to help make qualified beneficiaries aware of other coverage options available in the Marketplace. The plan administrator can complete this notice by filling in the blanks with appropriate health plan information.

The Department of Health and Human Services released final Health Insurance Portability and Accountability Act (HIPAA) privacy and security regulations on January 25, 2013. These regulations impact covered entities, including group health plans, most health care flexible spending accounts, and their business associates. The new rules were effective March 26, 2013, but covered entities and business associates generally have until September 23, 2013 to comply. The new rules also require the Department of Health and Human Services (HHS) to investigate HIPAA complaints and increase penalties for HIPAA violations. The regulations include four levels of violations with four tiers of penalties, ranging from $100 to $50,000 per violation to a maximum fine of $1.5 million.

Here are some things employers (on behalf of their group health plan or health care flexible spending account) should be doing now:

1. Review and Revise HIPAA Privacy Policies. Covered entities should pay special attention to policies such as: (a) the treatment of protected health information (PHI) of deceased persons. The plan may disclose PHI to family members or others involved in the decedent’s health care or payment for health care prior to the decedent’s death so long as the disclosure is relevant to the person’s involvement and is not inconsistent with the decedent’s express wishes; (b) access to electronic PHI. The plan must provide a copy of the PHI in electronic format if the participant requests it, and it is readily producible in such format; (c) response to request for access to PHI. The plan must respond to such requests within 30 days – the final rule eliminates the old provision that gave the plan extra time to respond if records are maintained offsite; (d) limits on disclosures to insurers or third-party administrators. The plan cannot disclose information about a participant’s care if the participant paid for the care and requests the information not be given to the insurer or third-party administrator; and (e) school immunization information may be disclosed to a school if state law requires such information for enrollment and the individual or his/her personal representative orally consents to such disclosure.

2. Review and Revise Breach Notification Procedures. Under the final regulations, the unauthorized access, use or disclosure of electronic PHI that compromises the security or privacy of PHI is presumed to be a reportable breach unless the plan or business associate can demonstrate there is a low probability the information has been compromised based on a risk assessment of certain factors, or the breach fits into certain exceptions. Plans should understand that discretion on deciding whether or not a breach must be reported has been severely curtailed, and must ensure that their breach notification procedures incorporate this new stricter standard.

3. Review and Revise Notice of Privacy Practices. Health plans must include certain information in the Notice of Privacy Practices, including a description of the types of information that require authorization, a statement that other uses or disclosures not described will require an authorization, a statement that a recipient of fundraising material may opt out of such material, a description of an individual’s right to limit disclosures if the patient paid for the care, and a statement that the plan must notify the affected individual of a breach of unsecured PHI. The revised notice must be posted electronically by September 23, 2013, or delivered 60 days later, by November 23, 2013.

4. Review and Revise Business Associate Agreements, if necessary. The HIPAA privacy and security rules now DIRECTLY apply to a covered entity’s business associates – in the past, the HIPAA provisions applied only by contract through the business associates agreement. Health plans are required to have agreements in place with their business associates (those entities acting on their behalf in a function involving PHI) before sharing PHI with those entities. Covered entities, including health plans, are responsible for the actions of business associates if the business associate is acting on their behalf, so may want to include indemnification language in the business associate agreement to protect themselves from actions of their business associate. The business associate agreement must require that the business associate complies with the HIPAA security rule, execute business associate agreements with their subcontractors, and report breaches of unsecured PHI to the covered entity. Agreements in place on January 25, 2013 generally must be modified by September 22, 2014. The OCR has provided sample business associate agreement language which can be found at: http://www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/contractprov.html

5. Train employees. Employers will need to train employees on the final regulations and changes to the plan’s policies and procedures.

Please contact us if we can be of assistance in updating your Notice of Privacy Practices, Business Associate Agreements or HIPAA policies and procedures.

I have blogged before [May 16, 2012, November 21, 2012, April 23, 2012, May 15, 2012, September 5, 2012] about the liability that can be imposed on businesses whose union employees participate in a multiemployer pension plan if the business ceases to participate in that plan. That liability is called withdrawal liability and can be imposed if a union decertifies, a union and the employer negotiate to replace the multiemployer pension plan with, for example, a 401(k) plan, or in some instances where the number of employees covered by the union pension plan is reduced because of plant closures, declining business conditions or other reasons. Withdrawal liability is imposed if the multiemployer plan is underfunded, a condition in which many such plans find themselves these days.

One of the seriously underfunded plans is the Central States Southeast and Southwest Areas Pension Plan, a Teamsters plan headquartered in Chicago. It has been in critical status or the “red zone” since multiemployer plans were required to begin reporting their funded status by zone in 2008. According to the Fund’s most recent annual funding notice, the Fund is expected to have an accumulated funding deficiency at least through the 2021 plan year. Thus, employers participating in that plan face substantial withdrawal liability and Central States has been diligent in pursuing that liability since 1980 when withdrawal liability provisions were added to federal law.

One of the features of withdrawal liability is that the liability is owed by all members of the controlled group of employers. This means that parent companies and their subsidiaries are jointly and severally liable for withdrawal liability that may be imposed on one of them. The controlled group rules also apply to “brother-sister” businesses, which are businesses owned in sufficiently the same proportions by the same five or fewer individuals, estates and trusts. The brother-sister controlled group rules can be quite complicated but in their simplest form require the aggregation of all businesses owned by one person or by that person and his or her spouse.

Controlled businesses could arise where an operating business (corporation or LLC) is owned by a person who also owns the real estate on which the business operates. That property ownership is often maintained in a separate entity or outside the operating business for liability and tax purposes. The lease arrangements between the operating business and the real estate business may be triple net leases where the entity holding the real estate has little or no responsibility for the property. Much like the hedge fund operators I discussed in earlier blogs [November 21, 2012 and May 16, 2012], these owners also would like to claim that the real estate is simply a passive investment and not a trade or business to be aggregated with the operating business. If the operating business withdrew from a multiemployer plan, the owners would claim that the person or entity owning the real estate cannot be required to pay the withdrawal liability.

The United States Court of Appeals for the Seventh Circuit, which is the circuit that includes Chicago, recently considered such a case where a business was assessed $3.6 million in withdrawal liability by the Central States Southeast and Southwest Areas Pension Fund. When the business did not pay that assessment, the Pension Fund claimed that the owner of the business was personally liable both because his work as an independent contractor for a golf course qualified as a trade or business under common control and because his ownership of the real estate used by the business was also a trade or business under common control. The district court found that the golf course activities constituted a trade or business but that real estate ownership was simply a passive activity.

The Seventh Circuit affirmed the district court but in the process declared a bright-line rule that where the owner of a withdrawing business leases property to that business, the leasing activity qualifies as a trade or business. If that trade or business is owned personally by the owner of the withdrawing business, the leasing activities and the withdrawing business would be aggregated under the controlled group rules and both would be responsible for the withdrawal liability assessment. In this case, since the real estate was held by the business owner personally, that meant that the business owner personally was responsible for the $3.6 million withdrawal liability.

The Seventh Circuit also found that the owner’s independent contractor activities, where he essentially acted as a consultant and manager for a golf course, also constituted a trade or business to be aggregated with the withdrawing business. The owner had tried to suggest that he acted as an employee of the golf course for those activities, but the Seventh Circuit noted that the business owner received a 1099-MISC rather than a W-2 from the golf course and filed tax returns claiming independent contractor status. The court concluded that the owner was not an employee of the golf course. Therefore, his independent contractor business was also aggregated with the withdrawing business, so he was responsible for the withdrawal liability because of that business as well.

In light of this decision, owners of businesses whose employees participate in multiemployer plans may wish to review the structure of their other business activities. If they have an independent contractor business or own the real estate on which another of their businesses operates they may find themselves personally responsible for withdrawal liability if their operating business fails to pay a withdrawal liability assessment.

Employers who sponsor health plans for their employees can purchase insurance contracts to fund those plans. Alternatively, employers can self-fund or self-insure those benefits, agreeing to pay the claims themselves. Many employers who provide self-funded plans also buy stop-loss insurance to cover the risk of exceptionally large claims. However, employers must be careful that their stop-loss coverage provides adequate protection.

A recent case from Alabama highlights the risk of a disconnect between the employer’s plan and the stop-loss coverage. The employer changed to a self-funded plan and purchased stop-loss that provided coverage for member claims that exceeded $75,000 up to a $1 million lifetime maximum. The employer thought that the health plan imposed a $1 million lifetime maximum on benefits. However, the Blue Cross plan that the employer offered its employees had a lifetime maximum only for certain services, such as out of network coverage. Other services did not have a lifetime maximum. (Under health care reform, all plans must eliminate lifetime maximums for essential health benefits so in the future employers should have less difficulty understanding this portion of their plan design.)

A participant in the employer’s plan gave birth to premature twins, one of whom had a serious medical condition and quickly amassed costly medical bills, amounting to over $2.8 million in claims over a several year period. That series of claims exhausted the maximum stop-loss reimbursement and the employer found itself paying an additional $1.8 million dollars in claims above the stop-loss. The employer sued a number of vendors to the plan, including the insurance agents and Blue Cross claiming that they should have alerted the employer to the difference between the plan design and the stop-loss coverage.

Although the employer suggested a number of legal theories under which the vendors might be responsible for the employer’s predicament, the court rejected most of those theories. All claims against Blue Cross were dismissed and most claims against the insurance agents were dismissed. The one remaining claim was a breach of fiduciary duty claim, where the employer argued that the agents had a special relationship with the employer in the design of the plan and the stop-loss coverage. Because the agents were purported to have acted as trusted advisors in the transaction, the court refused to dismiss that claim. Thus, the employer will have the opportunity to show the court that there was a fiduciary relationship between the insurance agents and the employer and that the insurance agents should cover the losses not covered by the stop-loss insurance.

One impediment that the employer will have with its claim relates to the fact that stop-loss coverage is not issued on a guaranteed basis and that stop-loss carriers can underwrite coverage and reduce risk by limiting particular claims. The medical claims of the baby were insured over several policy years. Even if the stop-loss coverage had not contained a lifetime limit, after the first policy year, it was likely that the stop-loss carrier would have refused to cover the medical claims of the child or would have severely limited the extent to which it would have provided that stop-loss coverage in any event. Thus, it is not clear that the employer could have obtained adequate stop-loss coverage once the premature baby was born and it was known that there would be substantial medical claims in future policy years.

There are (at least) two lessons for employers. First, make sure that if your plan is self-funded, your stop-loss coverage does not have restrictions and limitations not reflected in your plan design – or that you are aware of those differences and are comfortable accepting the risk. Second, understand that even if you have adequate stop-loss coverage consistent with your plan design, a high claim that continues through multiple policy years is likely to be limited or excluded from stop-loss coverage after the first policy year. You need to understand that one of the risks of self-funding is that the adequate stop-loss coverage might not be available for claims that span multiple policy years.

A taxpayer we will call John worked for a savings bank in New York that was acquired by Washington Mutual Bank. John participated in the New York bank’s supplemental executive retirement plan (SERP) and its deferred compensation plan, both of which were nonqualified deferred compensation plans. When Washington Mutual Bank acquired the New York bank, the taxpayer retired and began receiving monthly payments for life under the SERP and a year later over a period of 12 years under the deferred compensation plan. John resided in both New Jersey and Virginia but was never a resident of New York. Presumably, however, John worked in New York while he was employed by the bank.

In 2008 Washington Mutual Bank filed for bankruptcy and its assets were sold to JPMorgan Chase (“Chase”). Under a global settlement agreement, Chase did not assume the SERP or deferred compensation plan, but was required to satisfy the obligations under the plans. To that end, in May of 2012, Chase paid John a lump sum distribution representing the present value of the annuity payment under the SERP and the balance in the deferred compensation plan. Chase withheld from the distribution New York state and local estimated taxes. John asked the State of New York for an advisory opinion regarding whether New York state and local taxes should have been withheld from the payments.

Based on federal law, the New York Commission of Taxation and Finance concluded that the amounts would not be subject to New York taxes. Under federal law, states are not allowed to tax retirement income of nonresidents if the payments meet certain criteria. If the payments are from a nonqualified deferred compensation plan, the payments must be made over a period of at least ten years or for life. John’s payments had met those requirements at the time that they began. Of course, those payments quit being lifetime or ten year installments when they were paid in a lump sum after the bankruptcy. The New York Commissioner concluded that the unforeseeable act of Washington Mutual’s filing for bankruptcy should not change the tax treatment of the payments for John. Therefore, John’s payments would not be subject to New York tax and he would be able to get a refund of the amounts withheld.

New York is known as a state that aggressively pursues and taxes nonqualified deferred compensation earned by nonresidents while working in New York. This advisory opinion favors the taxpayer by not asserting New York taxation in a situation in which unforeseeable circumstances resulted in a change in the method of payment. Because the decision is an advisory opinion, only the taxpayer who requested it can rely upon it. Nevertheless, it is helpful authority for taxpayers who structure payments from their deferred compensation plan in order to avoid taxation by a state in which they are not a resident at the time of payment. Other states sometimes look to New York or California for guidance on these issues since those states, with their larger populations, have a more developed body of law on these issues. Taxpayers may have greater confidence that they can move after retirement to a state with low or no income taxes, receive their nonqualified deferred compensation payments over ten years or for life, and avoid taxation by the state where they earned the income even if their chosen payment arrangement changes for reasons beyond their control.

Because this is a state tax advisory opinion, it does not address federal tax issues, such as Internal Revenue Code Section 409A, the tax code section that limits the ability of employers and employees to change the time and form of deferred compensation payments.  The payments in this case began in 2002 and 2003 and 409A does not apply to deferred compensation amounts that were fully vested by December 31, 2004.  Therefore, it is likely that Section 409A did not apply to this acceleration of benefits.  However, employees with deferred compensation subject to Section 409A would also have to consider the impact of that statute on any change in the payment schedule of their deferred compensation.  An employee may be able to avoid the imposition of state taxes from the state in which the deferred compensation was earned, but might still be subject to penalty taxes under Section 409A for having accelerated payment of the benefit.  Employees would want to work closely with their advisers in situations in which deferred compensation payments are proposed to be changed as a result of the employer’s bankruptcy or other financial restructuring.

Employers know that benefits under a retirement plan can be split between a participant and a former spouse in the event of a divorce under the terms of a qualified domestic relations order (QDRO). A domestic relations order is qualified if it meets certain technical requirements. A recent decision from the Minnesota Supreme Court highlights the adverse consequences that can befall a former spouse who delays obtaining a QDRO.

The Minnesota case involved Gary, a participant in a multiemployer plan, who was married in 1964 and divorced in 1993. The divorce decree provided that Patricia, his former spouse, would be awarded a one-half interest in the marital share of all Gary’s future pension payments and that Patricia would be named as the survivor beneficiary if Gary elected a pension with a survivor benefit. In order to enforce that award, Patricia needed to prepare a QDRO that would be served on the multiemployer plan that would require the plan to split Gary’s pension benefit appropriately between Gary and Patricia.

Several years after the divorce and before Patricia prepared a domestic relations order, Gary remarried. He then retired in July of 2004 and made a pension benefit election, choosing a joint and 50% survivor annuity in favor of Shelly, his new wife.

Patricia finally obtained a domestic relations order and served it on the multiemployer plan in 2005. The order assigned a 50% interest in Gary’s retirement annuity to Patricia, including a portion of any survivor benefits. The order was then served on the plan which concluded that the order was not a QDRO because it assigned to Patricia a portion of an annuity benefit already vested in someone else, namely, Shelly, the current spouse. Gary then died in October of 2005. Patricia tried to enforce the order and the Minnesota district court ordered the plan to begin paying survivor benefits to Patricia and also awarded her over $55,000 in attorneys’ fees and costs.

The Minnesota Supreme Court reversed. The court concluded that Shelly’s right to the survivor benefit vested when Gary retired and elected a survivor benefit in her favor. Because Patricia did not provide the domestic relations order to the plan until after Gary had elected his form of retirement benefit, it was too late for Patricia to claim her share of Gary’s pension, at least from the portion otherwise payable to Shelly (which after Gary’s death, was the only benefit being paid).

The supreme court acknowledged that the decision led to a harsh result for Patricia but concluded that former spouses could protect themselves by acting with diligence to preserve their rights. In this case, 12 years passed between the divorce decree and the former spouse’s attempt to enforce her rights. The court concluded that a domestic relations order served after a pension benefit has commenced can be a qualified domestic relations order. However, such an order cannot operate to transfer a benefit from one survivor beneficiary to a different survivor beneficiary. It can only operate to direct all or a portion of the benefit being paid to the participant from the participant to the former spouse. In this case, because the participant had died, the former spouse was not entitled to benefits under the QDRO and was not entitled to attorneys’ fees.

The lesson for former spouses:  Prepare and file your domestic relations orders promptly after your divorce with the retirement plans from which you expect benefits. If you wait, you might not ever collect the benefits otherwise awarded to you under the divorce decree.