Introduction
Going through a divorce can be overwhelming—especially when it involves retirement assets like the Merchants Bancorp Employee Stock Ownership Plan. If you or your spouse are participants in this ESOP plan, dividing those assets correctly through a Qualified Domestic Relations Order (QDRO) is critical. Unlike traditional 401(k)s or pensions, ESOPs come with unique rules that make the QDRO process more complex.
At PeacockQDROs, we’ve handled thousands of QDROs from start to finish. That means we don’t just draft the order and leave you to figure out the rest. We handle the drafting, preapproval (if required by the plan), court filing, submission, and follow-up with the administrator. That’s what makes us different from firms that only prepare paperwork and hand it off to you.
Understanding ESOPs: Why the Merchants Bancorp Employee Stock Ownership Plan is Different
The Merchants Bancorp Employee Stock Ownership Plan is an ESOP—a type of retirement plan where employees hold ownership in the form of company stock. ESOPs are governed by special rules under ERISA and the Internal Revenue Code, and those rules impact how assets are divided in divorce.
Common ESOP-specific QDRO issues include:
- Timing of share valuation
- Whether the alternate payee can hold stock or must liquidate
- Put option rights after distribution
- Distribution timing based on plan rules
Let’s walk through how to correctly divide the Merchants Bancorp Employee Stock Ownership Plan using a QDRO, while accounting for those ESOP-specific factors.
Plan-Specific Details for the Merchants Bancorp Employee Stock Ownership Plan
Here’s what we know about this retirement plan, which helps us guide clients through the QDRO process:
- Plan Name: Merchants Bancorp Employee Stock Ownership Plan
- Sponsor: Merchants bancorp employee stock ownership plan
- Address: 410 MONON BLVD
- Plan Number: Unknown
- EIN: Unknown
- Industry: General Business
- Organization Type: Business Entity
- Participants: Unknown
- Plan Year: Unknown to Unknown
- Effective Date: Unknown
- Status: Active
- Assets: Unknown
While some administrative information like Plan Number or EIN is missing, these details can usually be confirmed through plan documents or directly from the plan administrator during the QDRO process.
Timing Matters: Stock Valuation and Distribution Delays
One of the key complexities in dividing an ESOP like the Merchants Bancorp Employee Stock Ownership Plan lies in how and when the shares are valued. Most ESOPs only assign a value to shares once per year—usually at year-end. That means if your QDRO is processed in July, the share value could be based on the previous December’s valuation.
Why This Matters
Let’s say your divorce settlement calls for the alternate payee (the non-employee ex-spouse) to receive 1,000 shares. The dollar value of those shares could fluctuate dramatically from year to year depending on the company’s performance. If you don’t specify how the valuation will be handled in your QDRO, you could unintentionally create a major mismatch in marital division.
Our Recommendation
- Include a clear valuation reference date in your order—such as “as of the plan year-end immediately preceding the date of divorce.”
- If shares are awarded, clarify whether the alternate payee will receive actual shares or the equivalent cash value.
Diversification Rights and the Role They Play
Under federal law, once ESOP participants reach age 55 and have at least 10 years of participation in the plan, they become eligible for diversification rights. This allows them to direct the plan to diversify up to 50% of their ESOP account into other investments over a 5-year window.
In a QDRO context, alternate payees may also receive diversification rights, depending on how benefits are structured and the plan’s internal rules. If the plan administrator does not allow the alternate payee to diversify or hold shares long-term, the plan may trigger a forced payout in cash.
The ESOP Put Option: What Your QDRO Should Address
Since ESOP shares are not publicly traded, alternate payees receiving shares may be concerned about liquidity. This is where the ESOP’s “put option” comes into play. Federal rules require most privately-held ESOPs to offer participants—and sometimes alternate payees—the right to sell shares back to the company at fair market value upon distribution.
Key Considerations
- The put option is time-limited—usually 60 days
- It may apply to alternate payees if they receive stock instead of cash
- The QDRO should clarify whether stock or cash is being awarded
If not clearly spelled out, the alternate payee could lose the right to fair market value or miss an important deadline. At PeacockQDROs, we always confirm the plan’s put option policy before structuring QDRO settlement language.
Distribution Rules for the Merchants Bancorp Employee Stock Ownership Plan
Distribution timing is often overlooked in ESOP QDROs. Most ESOPs don’t allow immediate distribution to alternate payees. Instead, the plan may wait until the participant terminates employment or reaches retirement age before paying out—even if the divorce happened earlier.
What This Means in Practice
If the employee continues working at Merchants bancorp employee stock ownership plan, the alternate payee might not receive their payout for years. This can create frustration or confusion if expectations aren’t clearly managed in the QDRO.
We recommend your order include language addressing when the distribution will occur and under what conditions (termination, diversification rights, reaching age 59½, etc.)—based on the plan’s specific terms.
Avoiding ESOP QDRO Pitfalls
Because ESOPs like the Merchants Bancorp Employee Stock Ownership Plan are complex, we often see common mistakes from DIY filers or general family law attorneys:
- Failing to address stock versus cash award
- Leaving out valuation date rules
- Ignoring plan-specific payout delays
- Missing language on put options
We’ve compiled a useful guide to common QDRO mistakes to help you catch these issues early. But better yet, let us handle the entire process for you—from drafting to approval, filing, and follow-up.
How PeacockQDROs Can Help
When it comes to QDROs for employee stock ownership plans like the Merchants Bancorp Employee Stock Ownership Plan, having experience matters. We’ve seen the mistakes other firms make, and we know how to avoid them.
- We confirm with the plan administrator how values are calculated annually
- We include language to protect your rights to diversification and liquidity options
- We handle submission, court filing, and follow-up
We maintain near-perfect reviews and pride ourselves on a track record of doing things the right way. Check out our QDRO services page to learn more about how we work.
Curious how long the process may take? See our breakdown of five factors that affect QDRO timelines.
Final Thoughts
Dividing assets through a QDRO is never one-size-fits-all, especially when you’re dealing with a unique plan like the Merchants Bancorp Employee Stock Ownership Plan. A missed deadline or misworded paragraph can cost thousands—or delay benefits for years. We make sure that doesn’t happen.
If your divorce was in California, New York, New Jersey, Connecticut, Kansas, Missouri, Iowa, or North Dakota, and you have questions about qualified domestic relations orders or dividing retirement assets like the Merchants Bancorp Employee Stock Ownership Plan, contact PeacockQDROs. We specialize in QDROs and have successfully processed thousands of orders from start to finish.
Get the answers you need—explore our QDRO resources or reach out for personalized help if you’re in one of our service states.