OFFICE OF THE CHIEF COUNSEL

OFFICE OF THE CHIEF COUNSEL

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

WASHINGTON, D.C. 20224

May 9, 2025

Number: 2025-0005

Release Date: 6/27/2025

CC:EEE:EB:QP3

GENIN-107542-25

UIL: 401.00-00, 414.16-00

--------------------------------------------------------------------------------------Dear --------------:

I’m responding to your February 5, 2025, letter to President Trump. Because you asked

about retirement and disability plans, your letter was referred to my office.

You state that your application for permanent and total disability benefits was improperly

denied. You also state that your qualified domestic relations order (QDRO) contains

errors that affect the amount of your retirement distribution, and that the plan does not

appear to be applying future benefit increases correctly. You further state that you

believe that other --------------------------------------are adversely affected by similar types of

errors.

In a general information letter, we are not able to comment on the tax treatment of a

particular taxpayer. In addition, we are not able to comment on how a particular

provision of an employer’s plan may be applied. However, I can provide the following

general information regarding disability benefits under section 104(a)(1) of the Internal

Revenue Code (Code) and QDROs under section 414(p) of the Code.

Generally, section 104(a)(1) excludes from gross income amounts received by an

employee under a workmen’s compensation act or under a statute in the nature of a

workmen’s compensation act that provides compensation to the employee for personal

injury or sickness incurred in the course of employment. Section 104(a)(1) does not

apply to a retirement pension or annuity to the extent that it is determined by reference

to the employee’s age or length of service, or the employee’s prior contributions, even

though the employee’s retirement is occasioned by an occupational injury or sickness.

Treasury Regulations under section 104 of the Code set forth rules regarding the

taxation of disability benefits, and do not address claims and appeals procedures for

disability benefits. In general, an appeal regarding a claim denial is addressed by the

plan administrator.

With respect to QDROs, section 414(p)(1)(A) provides, in general, that a QDRO is a

2

domestic relations order that creates or recognizes the existence of an alternate payee's

right, or assigns to an alternate payee the right, to receive all or a portion of the benefits

payable with respect to a participant under a plan, and that meets the requirements of

section 414(p)(2) and (3).

Section 414(p)(2) requires that a QDRO clearly specify: (A) the name and last known

mailing address (if any) of the participant and of each alternate payee covered by the

order, (B) the amount or percentage of the participant's benefits to be paid by the plan

to each alternate payee, or the manner in which that amount or percentage is to be

determined, (C) the number of payments or period to which the order applies, and

(D) each plan to which the order applies.

If you have questions or concerns about actions that are being taken by a specific plan,

you may want to try again to contact the plan administrators. If a specific plan is subject

to the Employee Retirement Income Security Act of 1974, you can also contact the

Department of Labor’s Employee Benefits Security Administration (EBSA) to speak with

a Benefits Advisor by calling toll-free at 1-866-444-3272 or visiting

https://www.dol.gov/agencies/ebsa/about-ebsa/ask-a-question/ask-ebsa.

For your convenience, I’m enclosing a copy of a Department of Labor publication on

QDROs.

I hope this information is helpful. If you have questions, please contact me at -------------------, or -----------------------at -------------------.

Sincerely,

Angelique Carrington

Branch Chief

Qualified Plans Branch 4

Office of Associate Chief Counsel

(Employee Benefits, Exempt Organizations, and

Employment Taxes)

Enclosure