Navy_QDRO_procedures_-_Attch_J-4.pdf

Procedures and Guidelines

Relative to Qualified Domestic Relations Orders

Submitted to the

Commander, Navy Installations Command Non-Appropriated

Funds 401(k) Savings Plan

(Effective as of June 1, 2013)

Contents: Page

I. INTRODUCTION 1

II. BASIC TERMS AND DEFINITIONS 2

III. INQUIRIES AND REVIEW PROCEDURES 4

A. Initial Inquiry Process B. Freezing a Participant’s Account C. Providing Plan Information and Participant Account Information D. Review Procedure E. Segregating the Account F. Processing Fees and Expenses G. Miscellaneous Provisions H. Contact Information

IV. INSTRUCTIONS TO SAMPLE QDRO FORM 12

V. SAMPLE QDRO FORM 15

VI. EXECUTION PAGE TO PROCEDURES AND GUIDELINES 20

I. Introduction

Commander, Navy Installations Command, NAF Division (the “Company”) maintains the Commander, Navy Installations Command Non-Appropriated Funds 401(k) Savings Plan (the “Plan”) as an employee benefit for its eligible employees and employees of other employers adopting the Plan. Pursuant to the

Plan Document, the Company, acting as Plan Administrator for the Plan and through its Committee for the Plan, hereby establishes these Procedures and Guidelines Relative to Qualified Domestic Relations

Orders submitted to the Plan, as reasonable procedures to determine the qualified status of a domestic relations order (“DRO”).

The Plan is a qualified retirement plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and subject to the provisions of the Employee Retirement Income Security Act of

1974, as amended (“ERISA”). The Code and ERISA provide that a Participant’s benefits under the terms of a qualified plan may be assigned to an “Alternate Payee” (a spouse, former spouse, child or dependent of the Participant) pursuant to a DRO provided that the DRO meets the qualification requirements of the

Code, ERISA and the provisions of the Plan. A DRO that meets these qualification requirements is a qualified domestic relations order (“QDRO”).

Unless a DRO meets the necessary criteria that make it a QDRO, a plan administrator is not permitted to make a distribution from the Plan to anyone other than the Participant.

According to the United States Department of Labor, a plan administrator determines whether a DRO is a

QDRO. For this Plan, the Plan Administrator is the Company, acting through a Committee established by the Company to oversee the operation, maintenance and administration of the Plan. The Committee has retained BPS&M, LLC, a subsidiary of Wells Fargo Bank, N.A., to serve as the Plan’s “QDRO

Processor.” The Company has delegated to the QDRO Processor the responsibility to review and process domestic relations orders and to determine whether a DRO qualifies as a QDRO in accordance with these procedures.

These procedures are effective June 1, 2013, and amend and restate any previous QDRO procedures established for the Plan.

The information contained in these procedures may be used to help Plan Participants, potential Alternate

Payees and attorneys who are, or will be, drafting DROs to the Plan. The Plan Administrator, QDRO

Processor or Recordkeeper may provide these procedures (including a Sample QDRO) to such parties as it deems necessary. Readers are cautioned that much of the information in this document is specific to the

Commander, Navy Installations Command Non-Appropriated Funds 401(k) Savings Plan and these procedures and the Sample QDRO should not be used in conjunction with other retirement plans.

These procedures include a Sample QDRO which may be used as a model to assist parties in drafting an order acceptable to the QDRO Processor. Use of the Sample QDRO is not required, but it may help expedite the review process. No representations are given that the Sample QDRO will meet the requirements imposed by a state court on such an order. The Sample QDRO is intended solely as a guide for use by those responsible for drafting a domestic relations order and does not represent legal advice.

The Plan, Company, Plan Administrator, QDRO Processor and Recordkeeper will act in accordance with the following procedures:

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II. Basic Terms and Definitions

Account Freeze (or Freeze) – means restrictions that are placed on the account of a Participant in the

Plan after the Plan Administrator or QDRO Processor receives a DRO or some other written documentation that the Participant’s account is the subject of a domestic dispute. See Section III.A (Initial

Inquiry Process) for what constitutes written documentation for this purpose. While the account is frozen, the Participant will be unable to take a loan, withdrawal or distribution from the Plan. The Participant will not be restricted from changing (or stopping) his or her elective deferrals or from changing the account investment mix while the account is frozen.

Alternate Payee – means a person who is assigned a portion of a Participant’s account in the Plan under the terms of a DRO. To be an Alternate Payee, a person must be the spouse, ex-spouse, child or otherwise be a dependent of the Participant.

Code - means the Internal Revenue Code of 1986, as amended from time to time, and as in effect on the relevant date to be interpreted hereunder.

Company – means Commander, Navy Installations Command, NAF Division or other employers adopting the Plan.

Domestic Relations Order (DRO) – means a judgment, decree or order issued by a court or state agency of proper jurisdiction and made pursuant to a state domestic relations law that relates to the provision of child support, alimony payments or marital property rights. A domestic relations order gives or attempts to give an Alternate Payee the right to receive all or part of the Participant's benefits in the Plan. Note: a

DRO is not a Qualified Domestic Relations Order until the QDRO Processor determines that it meets the requirements to be qualified.

ERISA -- means the Employee Retirement Income Security Act of 1974, as amended from time to time, and as in effect on the relevant date to be interpreted hereunder.

Interested Party – means (i) a Participant, (ii) an Alternate Payee (whether identified as such in a DRO or draft order) or a person who has the potential to become an Alternate Payee due to a pending civil domestic action, (iii) any legal counsel or authorized representative designated in writing and purporting to represent a Participant or Alternate Payee or (iv) any person named in a DRO or other court order.

Participant – means an employee or former employee of the Company (or other employers adopting the

Plan) who has an account in the Plan.

Plan – means the Commander, Navy Installations Command Non-Appropriated Funds 401(k) Savings

Plan , as amended from time to time. The Plan is a qualified, defined contribution plan maintained by the

Company as an employee benefit for its eligible employees.

Plan Administrator – means the Company, acting through the Committee or a delegate of the

Committee. Responsibilities that have been assigned to the Plan Administrator throughout these procedures may be reassigned or outsourced by the Plan Administrator.

Plan Recordkeeper (or Recordkeeper) – means an outside vendor responsible for maintaining individual account balances within the Plan. Wells Fargo is the current Plan Recordkeeper.

Qualified Domestic Relations Order (QDRO) – means a DRO that meets the statutory requirements of

ERISA and the Code as well as meeting the Plan’s requirements that are set out in these QDRO

Procedures.

QDRO Procedures -- means these procedures for the review and processing of DROs submitted to the

Plan. These procedures may be amended from time to time by the Plan Administrator without notice or approval by the Company’s governing board. The QDRO Procedures include the entire content of this packet as listed on the cover page.

QDRO Processor – means the person or organization appointed or hired by the Company to review and process DROs received by the Plan. The Plan Administrator has appointed BPS&M, LLC, a subsidiary of

Wells Fargo Bank, N.A., to serve as the Plan’s QDRO Processor, and has assigned to the QDRO

Processor the responsibility to review and process domestic relations orders in accordance with these procedures and such other direction provided by the Plan Administrator.

Sample QDRO Form – means a form prepared by or at the direction of the Plan Administrator and made a part of these procedures to assist an attorney or other party who is drafting a DRO for submission to the

Plan. The Plan Administrator and QDRO Processor give no assurances that the form complies with any particular state laws and assert that providing this form should not be construed as the practice of law in any jurisdiction. The Plan does not require that a DRO be submitted on the sample form to be qualified.

Segregation Date – means the date the Participant's account is actually split into two or more accounts (if so directed by a QDRO). If necessary, a separate account within the Plan will be established for the

Alternate Payee as of the Segregation Date by the Recordkeeper. The Segregation Date will occur as soon as administratively possible, but not later than required by applicable law, after a DRO is determined to be a QDRO.

Summary Plan Description (SPD) – means a detailed summary of the provisions of the Plan, the contents of which are dictated by the Code and ERISA.

Valuation Date – means the date that the Participant's account is to be valued for purposes of computing a split of the account. This date should be specified in the order and shall not precede June 3, 2013.

However, an earlier Valuation Date may be used if the Recordkeeper is able to, with reasonable efforts, obtain prior account information. Subject to the foregoing, the Valuation Date may be any business day on which the Recordkeeper is conducting business and on which Plan assets are valued. If the order fails to provide a Valuation Date, the QDRO Processor will establish the Valuation Date as the day the order is signed by the judge.

III. Inquiries and Review Procedures

A. Initial Inquiry Process

1. An initial inquiry about the Plan’s QDRO procedure begins with the Participant, the

Alternate Payee, or an attorney representing one of these parties contacting the Plan

Administrator or QDRO Processor and advising the Plan Administrator or QDRO Processor that a Participant’s account is the subject of a domestic dispute. The initial inquiry may take the form of (i) correspondence, (ii) a court subpoena or other legal document served on the

Plan Administrator, (iii) a draft domestic relations order or (iv) a final domestic relations order signed by a judge or other appropriate government official.

2. Upon initial inquiry, the Plan Administrator or QDRO Processor will send to the Participant and the notifying party a copy of the Plan’s QDRO Procedures along with written notice that the Plan has received this request. The Plan Administrator or QDRO Processor may provide a copy of the QDRO Procedures or other information about the Plan (but not information regarding a Participant’s account) upon verbal request; however, such a request shall not be considered notice of an Alternate Payee’s potential claim against a Participant’s account in the Plan.

3. If the initial inquiry includes written documentation indicating that a participant’s account may be subject to a QDRO or that a DRO is forthcoming, the Plan Administrator or the

QDRO Processor will instruct the Plan Recordkeeper to place a Freeze on the Participant’s account. An Account Freeze will not occur on verbal inquiry alone.

B. Freezing a Participant’s Account

1. Once the Plan Administrator or QDRO Processor has been properly notified (as set forth in

Section III.A above) that a Participant’s account is the subject of a domestic dispute, a

Freeze shall be placed on the Participant’s account. The Freeze will be placed upon the

Participant’s entire Plan account balance. While the Freeze is in place, the Participant cannot obtain withdrawals, distributions or loans from the Plan. While the Freeze is in place, the

Participant can (i) make additional contributions and loan payments (if any) to the account,

(ii) discontinue or modify his or her deferral arrangement and (iii) initiate investment direction changes. In addition, the Company may continue to make contributions to the account and the account will continue to incur investment earnings and losses.

2. When a Freeze has been placed on an account, the QDRO Processor will send a

“Notification of Freeze” to the Participant and to the Alternate Payee. Alternatively, the

QDRO Processor may send this notification to the legal representatives that either party has designated for receipt of notice. This notification may be sent as part of the mailing that includes the QDRO Procedures and may be combined with any other notice required under the procedures. The notice will also explain what events must occur before the Account

Freeze can be lifted.

3. The Account Freeze shall be lifted by the QDRO Processor upon:

(a) a determination that the DRO is a QDRO and coincident with a split of the account into separate accounts for the Participant and the Alternate Payee(s);

(b) a final determination that the DRO is not a QDRO following expiration of the 60-day period set forth in Section III.D.1(c)(2);

(c) receipt by the QDRO Processor of a court order stating that the Freeze should be lifted; or

(d) receipt by the QDRO Processor of written notice from the Alternate Payee, or his or her attorney, indicating that the Alternate Payee no longer has a claim against the

Participant’s account.

4. In addition to the events described in Subsection B.3, the QDRO Processor may also lift an

Account Freeze following 30-day written notice delivered to both the Participant and

Alternate Payee in the event the Alternate Payee fails to respond (should a response be required) to any notice given under these Procedures or any written inquiry concerning the status of the DRO (or proposed DRO) or otherwise fails to provide or submit information and/or documentation requested by the QDRO Processor in connection with its review of the

DRO. The 30-day notice of this paragraph 4 shall be given no sooner than 60 days following the mailing or transmittal date of any of the communications mentioned in the preceding sentence.

C. Providing Plan Information and Participant Account Information

1. A copy of these QDRO Procedures shall be included with the notices distributed pursuant to

Section III.A, Section III.B or Section III.D, or on any other occasion the Plan Administrator or QDRO Processor deems appropriate; provided that the Participant and the Alternate

Payees each receive their initial copies prior to or in conjunction with the commencement of the appeal periods set forth in Section III.D.1(c). In addition, a copy of these QDRO

Procedures may be given to any requesting party.

2. Upon request of an Interested Party or at the discretion of the Plan Administrator or QDRO

Processor, an Interested Party will be provided general Plan information such as the Plan document, Summary Plan Description and other items deemed appropriate for obtaining a

QDRO or exercising the rights and benefits awarded thereunder (but not information specific to the Participant’s account).

3. Information that is specific to a Participant and the Participant’s account or accounts will only be provided directly to an Alternate Payee named in the DRO or to a legal representative of one of the parties to the domestic dispute if the Plan Administrator or

QDRO Processor has been provided one of the following:

a. The written consent of the Participant to share personal information and/or information pertaining to his or her accounts, or

b. A valid subpoena for information or an order issued by a court of proper jurisdiction in relation to a domestic relations matter.

4. Participant account information is subject to the limitations of the Plan’s recordkeeping system. The Company, Plan Administrator and Recordkeeper are not required to retain copies of a Participant’s prior statements regarding his or her account activity. If account information is not readily available due to limitations of the recordkeeping system, the Plan

Administrator, Recordkeeper and QDRO Processor shall not be required to recreate account information as part of the QDRO review process. In such cases, the Participant will be required to provide or recreate such information or the Interested Parties will be required to resolve such information through negotiation.

5. Participant information that is to be provided to the Alternate Payee or to a legal representative of the parties will be provided by hard copy via the U.S. Mail and will not be shared over the telephone, facsimile transmission or by e-mail.

D. Review Procedure

1. Procedures Upon Receipt of a DRO.

(a) Upon receipt of a DRO, the QDRO Processor shall send a written Notice Of Receipt of Order, in such form as the QDRO Processor may determine, to each person named in the DRO (at the address specified in the DRO, if applicable), together with a copy of the DRO and these QDRO Procedures (if not previously provided pursuant to

Section III.A). This notice may be combined with any other notice required by these

QDRO Procedures.

(b) Upon receipt of a DRO, the QDRO Processor shall direct the Recordkeeper to account separately for amounts which would be payable to the Alternate Payee if the DRO is determined to be a QDRO (except for any amounts that would not be distributable in any event during the period in which these procedures are applicable). No amount shall be paid to the Alternate Payee until the DRO is determined to be a QDRO, nor will this amount be made available to the Participant until a final determination is made with regard to qualification of the DRO.

(c) Upon receipt of a DRO, the QDRO Processor shall review the DRO to determine whether it satisfies the requirements for a QDRO pursuant to the Code, ERISA, the

Plan and these QDRO Procedures. The QDRO Processor shall prepare the appropriate notice of the determination of the qualification of the order. Unless extraordinary circumstances exist, the notice will be mailed via U.S. Mail within 60 days of receipt of the DRO to all Interested Parties. The notice may be combined with any other notice required under these QDRO Procedures.

(1) If the QDRO Processor determines that the DRO meets the requirements for a

QDRO, the QDRO Processor shall notify in writing all Interested Parties that a determination has been made that the DRO is a QDRO. The notice will be provided via U.S. Mail. If an Interested Party disputes this determination within

20 calendar days of the date on such notice, then the QDRO Processor will advise the Plan Administrator, who will refer the dispute to the Plan’s legal counsel for resolution. For purposes of this subparagraph (1), notice from an

Interested Party must be provided in writing to the Plan Administrator or QDRO

Processor.

(2) If the QDRO Processor determines that the DRO does not meet the requirements for a QDRO, the QDRO Processor shall notify in writing all Interested Parties that a determination has been made that the DRO is not a QDRO. A copy of the notice may be provided to the Plan’s legal counsel or other consultants.

a. If no Interested Party disputes this negative determination within 60 days of the date on such notice, the Alternate Payee or Alternate Payee’s attorney may submit a written request for the release of the Account Freeze on the

Participant’s account. In addition, any Interested Party may submit a court order requesting the release of the Account Freeze on the Participant’s account. Upon receipt of the written request or court order, the QDRO

Processor shall proceed as though a final determination has been made that the order is not a QDRO, and the QDRO Processor shall direct the

Recordkeeper to release the Account Freeze, if any, and revoke any other restrictions placed on the Participant’s account.

b. If within 60 days of the date on such notice, any Interested Party disputes this determination or notifies the Plan Administrator or QDRO Processor that steps are being taken to revise the order to make it a QDRO, the QDRO

Processor shall either (i) if the determination is in dispute, notify the Plan

Administrator, who will refer the dispute to the Plan’s legal counsel for resolution, or (ii) if the order is to be revised, permit such revision to be made, provided the revision is made within a reasonable time, subject to the

18-month time limit described in Section III.D.2. An Interested Party who disputes a determination or who intends to revise an order must inform the

Plan Administrator or QDRO Processor of such fact in writing.

c. The notice provided by the QDRO Processor to the Interested Parties under this subsection (2) will be provided via U.S. Mail and will include the following information: (i) the reason(s) the order is not qualified; (ii) citation of the Code or ERISA, or references to the Plan provisions or these

QDRO Procedures upon which the determination is based; (iii) instruction that the parties have 60 days to appeal the determination (or submit a revised or amended DRO); and (iv) a descriptive listing of any additional documentation, information or revisions essential for the order to be qualified and an explanation of why the listed items are necessary.

(3) The QDRO Processor shall include with the notices provided in subsections (1) and (2) above a copy of these QDRO Procedures unless the procedures were provided at the time of the Initial Inquiry (see Section III.A.2).

2. Procedures Upon Final Determination.

(a) If, at any time within 18 months from the date on which the first payment would be required to be made under the DRO, a final determination is made that the DRO (as revised, if applicable) is a QDRO, the Plan shall follow the terms of the QDRO.

(b) If, at the end of this 18-month period no final determination has been made that the

DRO is a QDRO, any Interested Party may submit a written request for the release of the Account Freeze on the Participant’s account. Upon receipt of the written request, the QDRO Processor shall instruct the Recordkeeper to release the Account Freeze, and request the Plan Administrator revoke any other restrictions placed on the

Participant’s account. The Participant shall be allowed to access his or her account in accordance with the terms of the Plan, as if a DRO was not pending or QDRO in place. If a DRO (as revised, if applicable) is subsequently determined to be a QDRO, such QDRO shall be applied prospectively only.

3. Procedures for Draft Orders or Amended Orders.

(a) Interested Parties are encouraged to submit a draft DRO for review before filing it with the court. The QDRO Processor will review a draft DRO in the same manner as it reviews a completed, court-executed order; provided, however, that the QDRO

Processor will not provide a formal notice of determination as provided in Section III

D.1(c) and the appeal periods of such Section shall not apply. The QDRO Processor will notify the drafting party in writing of any changes that are necessary to qualify the DRO. If no changes are required, the QDRO Processor will instruct the party in writing to have the draft order executed by the appropriate court officials, filed with the court and resubmitted to the QDRO Processor for final approval and processing.

In either case, the QDRO Processor shall provide the drafting party with a copy of these QDRO Procedures unless the procedures were provided at the time of the initial inquiry (see Section III.A.2).

(b) If the QDRO Processor provides a tentative determination that an order does not qualify as a QDRO (see subsection 1(c)(2) above), the Interested Party may submit for review a draft revised order or a draft amended order incorporating the recommendations made by the QDRO Processor. The QDRO Processor will review the draft revised or amended order in the same manner as it reviews a completed, court-executed order; provided, however, that the QDRO Processor will not provide a notice as provided in Section III.D.1(c), but will inform the parties in the manner set forth in subsection 3(a) above. An order which supersedes or amends an order already entered by the court must clearly state such fact.

E. Segregating the Account

If the DRO is determined to be a QDRO in accordance with these QDRO Procedures, the QDRO

Processor will send the appropriate information to the Plan's Recordkeeper to allow the Recordkeeper to calculate the amount to segregate from the Participant’s account for the benefit of the Alternate Payee in accordance with the terms of the QDRO.

The Recordkeeper will then establish a separate account for the Alternate Payee with the Plan.

Initially, the Alternate Payee’s account will be invested in accordance with the Plan’s Qualified Default

Investment Arrangement. The Alternate Payee’s account will remain invested in that manner until the

Alternate Payee makes his or her own investment selections in accordance with Plan procedures.

All parties should be aware that due to fluctuations in the market, the Alternate Payee’s account will experience investment gains or losses from the Segregation Date forward. Once the Alternate Payee's account has been established within the Plan, the Recordkeeper will provide the Alternate Payee with the appropriate documents and instructions to allow the Alternate Payee to request a distribution from the

Plan or make investment selections in accordance with the terms of the Plan.

F. Processing Fees and Expenses

The cost to review and process a DRO under these QDRO Procedures will be charged directly to the account of the subject QDRO parties and not the accounts of other Plan participants or the Plan as a whole. The Plan shall charge a processing fee of $500 for each DRO it reviews. The fee shall be for the time and expense incurred by the QDRO Processor in reviewing and processing a DRO (or draft order) and providing the notices and related materials required by these procedures. Included in the fee shall be the review and processing of any amended or revised DRO related to the original.

The foregoing fee shall be deducted from the applicable parties' accounts following the final determination made pursuant to Section III.D.1(c)(1) and subsequent to the account segregation as follows:

If the order assigns the Alternate Payee a percentage of the Participant's account determined as of the Valuation Date, the fee will be deducted on a pro-rata basis after the account segregation. For example, if an order assigns the Alternate Payee twenty-five percent (25%) of the Participant's account determined as of the Valuation Date, the Alternate Payee's account will be charged twenty-five percent (25%) of the processing fee, or $125. The Participant's account will be charged seventy-five percent (75%) of the processing fee, or $375.

If the order assigns the Alternate Payee a lump sum of the Participant's account determined as of the Valuation Date, the fee will be deducted from the Participant's account after the account segregation. Such deduction shall not reduce the Alternate Payee’s flat-dollar award. For example, if an order assigns the Alternate Payee $10,000.00 of the Participant's account determined as of the Valuation Date, the Participant's account will be charged the $500 processing fee.

The fee will be charged whether or not the DRO is determined to be qualified. If the Participant and the

Alternate Payee wish to have the legal and administrative cost associated with processing a QDRO allocated in a manner that is different from the foregoing, the alternative method of allocating such cost must be specifically provided for in the QDRO.

In the event no final determination is made and the 18-month period set forth in Section III.D.2(b) has expired, the $500 processing fee will be deducted from the Participant’s account following distribution of the notice to Interested Parties as required by said section. If an initial inquiry has been made pursuant to

Section III.A or a draft order submitted pursuant to Section III.D.3, but a DRO is not submitted, the $500 processing fee will be charged to the Plan as a whole as a general administrative expense.

G. Miscellaneous Provisions.

1. Award more than Vested Interest. Only a Participant’s vested account balance is available for distribution or assignment pursuant to a QDRO. A DRO shall fail to be a QDRO if it awards the Alternate Payee an aggregate interest in the Participant’s accounts which is greater than the amount of the Participant’s total vested account balance at the time of the final determination provided in Section III.D.1(c). Unless a QDRO states otherwise, an assignment to an Alternate Payee of a percentage of the Participant’s account will be calculated on the Participant’s vested balance as of the Valuation Date.

2. Calculating award to Alternate Payee. A QDRO may assign the Alternate Payee a percentage of the Participant’s account balance or a flat dollar amount; provided such amount does not exceed the vested account balance of the Participant as of the date of final determination provided in Section III.D.1(c). In either case, a Valuation Date must be specified in the order or otherwise determinable by the QDRO Processor (see the definition of Valuation Date in Section II).

3. Calculating investment earnings and losses on Alternate Payee’s portion. Unless otherwise stated in the QDRO, investment gains and losses will be allocated on a pro-rata basis to the Alternate Payee’s portion based upon gains and losses credited to the

Participant’s account from the Valuation Date to the Segregation Date or the date of distribution, if earlier. Investment gains and losses will be based on the investment of the

Participant’s account pursuant to the terms of the Plan. After the Segregation Date the

Alternate Payee’s account will be invested in accordance with the Plan’s Qualified Default

Investment Arrangement, until such time, the Alternate Payee elects his or her own investment options. All parties should be aware that due to fluctuations in the market, the

Alternate Payee’s account will experience investment gains or losses from the Segregation

Date forward. Once the Alternate Payee's account has been established within the Plan, the

Recordkeeper will provide the Alternate Payee with the appropriate documents and instructions to allow the Alternate Payee to request a distribution from the Plan or make investment selections in accordance with the terms of the Plan.

Notwithstanding any provisions of these procedures, the drafter of a DRO is responsible for definitively stating what plan assets are being assigned to the Alternate Payee. A formula in the order that does not clearly identify the plan assets being assigned or that does not include an acceptable Valuation Date will fail to be a QDRO for not providing a definitely determinable benefit.

4. Loans. If a Participant’s account has an outstanding loan balance, or had an outstanding loan balance during any portion of the QDRO calculation period, the loan will NOT be treated as an asset of the Plan for purposes of splitting the account, unless the order specifically states otherwise. In no instance however, shall any portion of an outstanding loan be allocated to the Alternate Payee as part of the account split.

5. Tax Liability under a QDRO. A DRO will fail to be a QDRO if it attempts to assess the tax liability for a QDRO-mandated distribution contrary to the Code. In general, the Code requires that:

a. A distribution made to an Alternate Payee that is a spouse or the former spouse of the

Participant is taxed to the Alternate Payee. The Alternate Payee may make a tax-deferred rollover of this type of distribution.

b. A distribution made to an Alternate Payee that is a not the spouse or the former spouse of the Participant is taxed to the Participant. This type of distribution may not be rolled over.

c. A distribution made as a result of a QDRO is not subject to the 10% premature distribution penalty.

6. Waiver of Time Periods. Any time period set forth in these QDRO Procedures during which the Participant and Alternate Payee may comment on, appeal or otherwise challenge the findings of the QDRO Processor with regards to the status of a DRO, may be waived by mutual consent of the Participant and Alternate Payee, or their legal representatives. Such waiver must be provided to the Plan Administrator or QDRO Processor in writing.

H. Contact Information

1. All inquiries, DROs, correspondence or legal documents relating to a DRO should be directed to the QDRO Processor with a copy to the Plan Administrator.

2. The address for the Plan Administrator is:

Commander, Navy Installations Command, NAF Division

5720 Integrity Drive

Millington, Tennessee 38055

Attn: NAF HR Program Administrator

(901) 874-6924

The address for the QDRO Processor is:

BPS&M, LLC

5301 Virginia Way, Suite 400

Brentwood, TN 37027

ATTN: QDRO Processor

IV. Instructions to Sample QDRO Form

Section V to these QDRO Procedures is a Sample QDRO Form that may be used in preparing a Qualified

Domestic Relations Order for the Plan. Before the Plan can comply with a domestic relations order

(“DRO”), the DRO must be qualified. This means that the DRO must satisfy QDRO requirements that are set forth in Section 414(p) of the Code, Section 206(d)(3) of ERISA and the terms and procedures set forth in the Plan. Please note that the Sample QDRO Form is intended solely as a guide and does not represent legal advice. However, use of this form should expedite qualification.

The form is designed for use with respect to a single Alternate Payee and with respect to the Commander, Navy Installations Command Non-Appropriated Funds 401(k) Savings Plan only. If there is more than one Alternate Payee, a separate form for each one should be used.

The Plan is a defined contribution plan. Defined contribution plans provide a benefit based on the

Participant’s account balance. Interested Parties may obtain information regarding the Participant’s account by complying with Section III.C.3 of these QDRO Procedures.

As a general matter, the drafter of a domestic relations order for the Plan should consider whether he or she wants to provide a benefit equal to a dollar amount or a percentage of the Participant’s account balance. In either case, a Valuation Date should be specified. Investment earnings and losses will be allocated to the Alternate Payee’s portion of the account balance based upon earnings and losses in the

Participant’s account from the Valuation Date (as defined in Section II) to the Segregation Date or date of distribution, if earlier. If the final QDRO does not specify that earnings are to be paid to the Alternate

Payee on his or her awarded portion, earnings or losses will be allocated to the Alternate Payee’s portion from the Valuation Date to the Segregation Date or distribution date, if earlier. The earnings or losses will be based on the investments of the account. After the Segregation Date, the Alternate Payee’s portion of the account will be invested initially in the Plan’s Qualified Default Investment Arrangement. Due to fluctuations in the market, the Alternate Payee’s account will experience investment gains or losses from the Segregation Date forward. Upon receipt of the distribution materials sent by the Plan Recordkeeper, the Alternate Payee may then elect to receive a distribution and/or elect to change his or her own investment options.

Following are section-by-section instructions for the Sample QDRO Form:

Part A – Participant Information

Provide the full name, date of birth, social security number and current mailing address of the Participant.

The Participant’s telephone number is optional. For security or privacy reasons, the party may certify to any of this information in a separate document.

Part B – Alternate Payee Information

Provide the full name, date of birth, social security number and current mailing address of the Alternate

Payee. Also, provide the Alternate Payee’s relationship to the Participant. The Alternate Payee’s telephone number is optional. For security or privacy reasons, the party may certify to any of this information in a separate document.

Part C – Plan Name

The name of this Plan is the Commander, Navy Installations Command Non-Appropriated Funds 401(k)

Savings Plan ,and includes any former plans that have since merged with the Plan. If the Participant is a member of another retirement plan, an interested party should contact the plan administrator of that plan for information and guidance on preparing a QDRO specifically for that plan.

Part D – Payment Information

Amount of payment to Alternate Payee – Indicate the total amount from the Participant’s aggregate accounts under the Plan that is to be paid to the Alternate Payee. There are two options for stating this amount:

A flat dollar amount with earnings computed from the Valuation Date, (Example: $10,000 with investment gains and losses computed from _________).

A percentage of the available balance in the Participant’s account as of the Valuation Date, (Example: 50% of the Participant’s account balance as of __________, with investment gains and losses computed on such amount from __________).

Drafting Advice – If the amount to be awarded the Alternate Payee is based upon a complicated formula or a formula tied to other conditions of a property settlement, then the drafter of the order should attempt to compute the results of that formula and convert it to one of the two formats listed above. An order that requires the Plan Administrator to perform calculations that are not part of the normal recordkeeping process of the Plan may be rejected for not providing a definitely determinable benefit. NOTE: The Valuation Date cannot precede June 3, 2013. However, an earlier Valuation Date may be used if the

Recordkeeper is able to, with reasonable efforts, obtain prior account information.

Vested Balance Limit – If the Participant is less than 100 percent vested in his or her account at the time an order is processed, the amount assigned to the Alternate Payee cannot exceed the Participant’s vested balance. An order seeking an amount greater than the vested balance will be rejected.

Earnings and Losses – Unless otherwise stated in the QDRO, investment earnings and losses will be allocated on a pro-rata basis to the Alternate Payee’s portion based upon gains and losses credited to the Participant’s account from the Valuation Date to the Segregation

Date or the date of distribution, if earlier.

Form and Time of payment – Once an order is received by the Plan Administrator, the Plan will separately account for the amounts to which the Alternate Payee may be entitled in accordance with the terms of the order. Once the order qualifies as a QDRO, the amount required to be paid to the Alternate

Payee will be segregated into a separate account in the name of the Alternate Payee. When a separate account is established for the Alternate Payee, the Plan Recordkeeper will provide the Alternate Payee with information on how to request a distribution. An Alternate Payee may elect any form of distribution available under the Plan.

Part E – Death of Alternate Payee

This section deals with the contingency of the Alternate Payee dying prior to a distribution of benefits from the Plan. Generally, no changes to these provisions are necessary.

Part F – Other Orders

An Alternate Payee may not obtain an order directing the Plan to pay benefits that are already the subject of a prior order. If other orders are being entered in connection with this proceeding (for instance, there is more than one Alternate Payee), specify them in this section. If the Participant’s account is not subject to any prior orders, please enter “none.”

Part G – Understandings and Conditions

This section contains provisions which are usually standard (boilerplate) language for any QDRO.

Generally, no changes to these provisions are necessary.

Part H – Additional Provisions

Provisions other than those provided for in the form may be added. The drafter should keep in mind, however, that such provisions might prevent the order from being a QDRO.

Part I – Execution

The completed order must be submitted to the court for the judge’s approval and signature. A “draft” order may first be submitted to the Plan Administrator for review prior to submission to the court. This may avoid having to submit an amended or corrected order to the court. However, the Plan’s official review procedures, time limitations and account restrictions do not commence until a signed order is received by the Plan Administrator or QDRO Processor.

V. Sample QDRO Form for the

Commander, Navy Installations Command Non-Appropriated Funds 401(k) Savings Plan

[This sample QDRO Form is provided for the convenience of legal counsel. It is intended as illustrative guidance of provisions that are consistent with the terms of the Commander, Navy

Installations Command Non-Appropriated Funds 401(k) Savings Plan . It is intended solely as a guide and does not represent legal advice. It is not the only form of order that is acceptable to the

Plan, nor is it a mandatory form. It is not intended to be a substitute for the independent judgment and acumen of counsel to the parties. This form does not take into consideration any state laws or local court rules which may be applicable.

Instructions and editorial comments are contained in brackets [ ] and should be removed from the actual order. All blanks should be filled in on the actual order with information provided by the parties or counsel prior to submission to the court.

[Enter Proper Court Name]

Case Number:

[insert Alternate Payee’s name] Qualified Domestic Relations

Order to the Commander, Navy

Installations Command Non-

Appropriated Funds 401(k)

Savings Plan

Complainant, [insert Participant’s name]

Defendant, This Order applies to benefits under the Commander, Navy Installations Command Non-

Appropriated Funds 401(k) Savings Plan (hereafter referred to as the “Plan”), and is entered with respect to the interest of [Participant’s name], a participant in the Plan, whose interest was divided between the parties as set forth in the [specify decree - e.g. property settlement agreement or divorce decree] dated [date of agreement]. This Order is granted pursuant to section _____ of the laws of the State of _____________.

This Order is intended to provide for the division and disposition of the interest of the [specify appropriate party, e.g., defendant], [insert Participant’s name], in the Plan and to grant the

[specify other party, e.g., complainant], [insert Alternate Payee’s name], as an Alternate Payee, rights in such interest as set forth in this Order.

This Order shall apply to the Plan and to any successor employer plan or any other plan to which liability for payment of the benefit described herein may be transferred.

This Order is intended to constitute a “Qualified Domestic Relations Order” within the meaning of Sections 401(a)(13) and 414(p) of the Internal Revenue Code of 1986, as amended (the

“Code”), Section 206 of the Employee Retirement Income Security Act of 1974, as amended

(“ERISA”) and the terms and procedures of the Plan referenced in Part C of this Order.

It is hereby ordered by the Court as follows:

Part A – Participant Information

This order pertains to the Plan account of the following Participant:

[Insert the following information for the Participant:

Name

Date of Birth

Social Security Number

Mailing Address

Telephone number (optional)]

Part B – Alternate Payee Information

This order intends to assign an interest in the Participant account referred to in Part A to the following Alternate Payee:

[Insert the following information for the Alternate Payee:

Name

Relationship to Participant

Date of Birth

Social Security Number

Mailing Address

Telephone number (optional)]

Part C – Identification of Plan

This order applies to benefits under the Commander, Navy Installations Command Non-

Appropriated Funds 401(k) Savings Plan , a 401(k) defined contribution plan, the Plan

Administrator for which is:

Commander, Navy Installations Command, NAF Division

5720 Integrity Drive

Millington, Tennessee 38055

Attn: NAF HR Program Administrator

Part D – Payment Information

(1) Amount of payment to Alternate Payee. – There is hereby assigned to the Alternate

Payee, and, as otherwise provided in this order and subject to the Plan Administrator’s determination that this order is indeed a Qualified Domestic Relations Order, the Plan shall pay to the Alternate Payee, from the Participant’s Plan account the following amount: [select and complete the desired option; see the Instructions to the Sample QDRO Form for guidance]

[option 1] $_________ [enter a specific dollar amount] determined as of the following specified date______________ (known as the

Valuation Date*).

[option 2] ____ percent (__%) of the Participant’s vested account balance (net of any outstanding loans taken by the Participant) determined as of the following specified date______________

(known as the Valuation Date*).

Investment gains and losses will be allocated to the Alternate Payee’s portion from the Valuation

Date.*

*[The Valuation Date may not precede June 3, 2013. However, an earlier Valuation Date may be used if the Recordkeeper is able to, with reasonable efforts, obtain prior account information.]

(2) Form and Time of payment – Once this order is determined by the Plan Administrator to be a Qualified Domestic Relations Order, a separate account shall be established for the benefit of the Alternate Payee, if the Plan Administrator so requires. Thereafter, upon receipt of a properly completed distribution request of the Alternate payee, a distribution to the Alternate Payee shall be made in a single lump sum payment in cash; provided, however, that if the Alternate Payee’s account balance is $5,000 or less, the Plan Administrator may distribute such amount without prior consent of the Alternate Payee to the extent permitted by the Plan and Section 401(a)(11) of the Code.

(3) Source of payment and Participant’s remaining interest – The Alternate Payee shall not be deemed or considered to be a spouse, former spouse or surviving spouse of the Participant for any purpose of the Plan. The Plan Administrator may, but shall not be required to, cause the trustee of the Plan to segregate in a separate account under the Plan the interest awarded to the

Alternate Payee under this order pending the order’s determination as a QDRO and the actual distribution to the Alternate Payee. To the extent that the Participant’s Account consists of monies coming from (a) employee contributions, employer contributions or rollover contributions, or (b) monies that have been divided for investment purposes into different classes or categories of investments, the Plan Administrator shall cause the trustee to withdraw the monies for payment to the Alternate Payee in reasonable proportion to such contributions and investments as they exist on the date payment is made under this order to the Alternate Payee.

Part E – Death of Alternate Payee

Except as provided in this Part E, payments required under this order shall be made only to the

Alternate Payee. If the Alternate Payee dies after this order is deemed a QDRO by the Plan

Administrator but before the actual distribution is made to the Alternate Payee, then distribution of the benefit awarded to the Alternate Payee hereunder shall be made to the Alternate Payee’s beneficiary, if any, that is on file with the Plan Administrator in accordance with beneficiary procedures established by the Plan. In the event that no beneficiary form is on file, the Plan shall pay the benefit to the Alternate Payee’s estate upon the Plan Administrator’s receipt of an application by the legal representative of the estate.

Part F – Other Orders

By submission of this order, the parties to this order certify that, except as specified below, they are not aware of any prior orders which purport to dispose of the benefits described herein

[specify other order]:

Part G – Understandings and Conditions

(1) Definition of Terms. Terms used in this order shall have the same meaning as in the Plan unless otherwise noted herein.

(2) Change in Name and Address. The Participant and the Alternate Payee shall advise the

Plan Administrator of any changes in their mailing address. If the most recent address provided to the Plan Administrator is incorrect, the Plan Administrator shall have no obligation beyond that required by ERISA or the Code to locate the correct address for the Participant or the Alternate

Payee and shall be entitled to rely on the most recent address provided.

(3) Qualified Domestic Relations Order. This order is intended to be a Qualified Domestic

Relations Order within the meaning of Sections 401(a)(13) and 414(p) of the Code and Section

206(d)(3) of ERISA and comply with the terms and written procedures of the Plan.

(4) No Interest Following Distribution. Upon distribution by the Plan of the benefits provided for in this order, the Alternate Payee’s claim against the Plan shall forever terminate.

The Alternate Payee waives any right to Plan benefits that are not expressly described in this order.

(5) Participant as Constructive Trustee. While it is anticipated that the Plan Administrator will pay directly to the Alternate Payee the benefit that is awarded by this order, the Participant is designated as constructive trustee to the extent that she/he receives any benefits under the Plan that are due to the Alternate Payee but paid to the Participant. The Participant is hereby

ORDERED AND DECREED to pay the benefit defined above directly to the Plan within three days after receipt of said benefits.

(6) Extent and Effect of Order. The parties herein shall cause a certified copy of this order to be served on the Plan Administrator. This order shall remain in effect until further order of this

Court. Nothing contained in this order shall be construed to require the Plan or Plan

Administrator:

(A) to provide to…