Dennis v. Retirement System

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In the Circu it Court for B altimore C ity Case No. 24-C-03-008321 IN THE COURT OF APPEALS OF MARYLAND No. 27 September Term, 2005 ELM ER D ENN IS, et al. v. FIRE & POLICE EMPLOYEE S RETIR EME NT SY STEM , et al. Bell, C.J. Raker Wilner Cathell Harrell Battaglia Greene, JJ. Opinio n by Rak er, J. Filed: January 18, 2006 Appellants, both fo rmer B altimore City polic e offic ers, ask this Court to determine whether payments of deferred retirement option plan ( DROP ) retirement benefits from the Baltimore City Fire and P olice Employees Retirement System ( the Retirement System ) are pension payments w ithin the mea ning of the Qualified Domestic Re lations Orders ( QDROs ) entered in appellants divorces, entitling the appellee spouses to a portion of the DROP payments in accordance with the terms of the QDROs. We shall hold that the DROP payments are pension payments under the QDROs, and that consequently the appellee spouses are entitled to their shares of the DROP payments under the QD ROs. I. Appellants, Elmer Dennis and Edmund Lubinski, are retired Baltimore City police officers. Appellee s Catherin e Dennis and Edna Sullivan are the former spouses of Elmer Dennis and Edmund Lubinski, respectively. The Retirement System and the Mayor an d City Coun cil of B altimore are also appelle es in this action. Lubinski and Sullivan were divorced by a Judgment of Absolute Divorce entered on February 22, 1990. The judgment was entered in accordance with an agreement reached by the parties. It provided as follows: IT IS FUR THER ORD ERED , in accordan ce with the aforesa id Agreement of the parties, that this is a q ualified D omestic Relations Order as defined in the Retirement Equity Act of 1984, as from time to time amended, and, in accordance therewith, the civil pension known as the FIRE AND POLICE EMPLOYEES RETIREMENT SYSTEM OF THE CITY OF BALTIMORE . . . is the civil pensio n which is subject to this order. The particip ant in the pension is the Defendant/C ounter- Plaintiff, EDMUND LUBINSKI . . . The alternate payee is the Plaintiff/Co unter-Defendant, EDNA J. VENA ZI . . . The Plaintiff/alternate payee s equita ble interest in sa id pension is hereby declared to be fifty percent (50%) of the marital share of said pension benefits, the marital share being that fraction of the benefit whose numerator shall be the number of months of the parties marriage, during which benefits were being accumulated, up to and including January 18, 1990, which number is 306, and wh ose deno minator sh all be the total number of months during which benefits were accumulated prior to the time when the payment of such benefits shall commence. The Plaintiff/Co unter-Defendant . . . shall receive fifty percent (50%) of the aforesaid marital share of any payme nts made from the pension to the participant, including any death benefits, if, as, and when, such payments are made. (emph asis add ed). Elmer Dennis and Catherine Dennis were div orced by a Ju dgment o f Absolu te Divorce entered on Jun e 7, 199 3. The judgment was apparently entered by the court without the agreement of the parties.1 The judgment contained a provision similar to that in the Lubinsk i judgmen t: AND IT IS FURTHER O RDERED, that this is a Qualified Dome stic Relations O rder as def ined in the R etirement E quity Act of 1984, as amended from time to time, and in accordance therewith, the Civil Pension kno wn as the Baltimo re City Fire and Police E mployee s Retire ment S ystem . . . is the pension 1 The record before us is not clear on the issue of whether the Dennis divorce judgment was ente red into w ith agreement by the parties. The judgment does not reference an agreement between the parties, and Catherine Dennis deposition testimony is not clear on this issue. We need not resolve this issue, however, as the result is the same regardless. See § IV.B ., fn. 6, infra, for discussion. As appellants arguments have presupposed that the Dennis divorce judgment was a consent judgment, and appellees have not contested this, we shall assume it is also. -2- which is subjec t to this O rder. The particip ant in the pension is the Plaintif f, Elmer Dennis, Jr. . . . The alternate payee is the Defendant, Catherine J. Dennis . . . The Defendant/Alternate Payee s equitable inte rest in said pensio n is hereby dec lared to be fifty percent (50%) of the m arital share of said pension benefit, the marital share being that fraction of the benefit whose numerator shall be the number of months of the parties marriage during w hich bene fits were being accumulated, which number is 345, and wh ose deno minator sh all be the total number of months during which benefits were accumulated prior to the time when the payment of such benefits shall commence. The Defend ant, Catherine J. D ennis, shall rec eive fifty perce nt (50%) of the aforesaid marital share of any payments made from the pension to the particip ant if, as, and when such paymen ts are made. (emphasis added ). Elmer Dennis began work at the Baltimo re City Police Department on September 24, 1964, and Lubinski began work at the Department on January 24, 1963. Both began participation in the DROP on August 1, 1996, and ceased participation on July 31, 1999. Both continued to work at the Department after participating in the DROP, with Elmer Dennis retiring on September 2, 2002, and Lubinski retiring on February 9, 2001. The Retirement System notified appellants by letter dated January 20, 1999, that it intended to treat payments of their DROP benefits as subject to division between them and their spouses in accordance with the formula specified in their QDROs. In response, appellants, along w ith other Ba ltimore City polic e officers, f iled a Com plaint in the Circuit Court for Baltimore City, seeking in junctive relief . This Com plaint, the subject of a previous -3- appeal to this C ourt, Brown v. Retirement System, 375 Md. 661, 826 A.2d 525 (2003), set out the facts relating to this Complaint as follows: Petitioners filed in the Circuit Court for Baltimore City on June 29, 199 9, a Complaint for Declaratory and/or Injunctive Relief, seeking a d eclaration tha t their benefits under the City s Deferred Retireme nt Option Plan ( DR OP ) are n ot marital property and should be disbursed solely to them. On April 19, 2000, petitioners filed an Amended Complaint for Declaratory and/or Injunctive Relief, joining their form er spouses as necessary parties und er Maryland Rule 2-21 1. Respo ndents argued that the Circuit Court lacked jurisdiction to determine marital property and that the ex-spouses w ere entitled to a share of petitioners DROP benefits. Motions by both sides for summary judgment were denied. ****** In lieu of testimony, the Circuit Court received the parties trial briefs, stipulations, and documentary evidence and heard oral argum ent in Apr il 2001. Re sponden ts asked for a dismissal of the amended complaint and a judgment that petitioners be required to pay DROP benefits to their former spouses in accordance w ith the orders in the divorce proceedings. In a written order issued April 11, 2001, the Circuit Court dism issed, with p rejudice, the petitioners complain t, but quixo tically ordered the Retireme nt System to treat all DROP benefits as ordinary pension benefits for the purposes of payments pursuan t to the parties Judgments of Divor ce. Petitioners noted a timely appeal to the Court of Special Appeals. In an unreported opinion, that court affirmed the trial court's determination that the DROP should be treated as an ordinary pension benefit for the purposes of payments pursuant to the parties judgments of divorce. The officers filed a petition for a w rit of cer tiorari, an d we g ranted th e petition . -4- Id. at 665, 668-69, 826 A.2d at 527-30 (footnotes omitted). In Brown, we held th at the Circuit Co urt erred in rea ching the m erits of the C omplaint, as the petitioners had failed to exhaust their adm inistrativ e reme dies. Id. at 673-74, 826 A.2d at 532-33. Consequently, we vacated the judgment of the Court of Special Appeals, and remanded with instructions to vacate the low er cour t judgm ents an d dism iss the ca se. Id. at 674-75, 826 A.2d at 533. After our decision in Brown, appellants filed claims with the Fire and Police Employees Retirement System Board of Trustees ( the Board ), challenging the Retirement System s treatment of their DROP benefits as subject to division under their QDROs. Pursuant to Article 22, § 41 of the Baltimore City Code (2000), a hearing was held on appellants claims on Aug ust 28, 2003. The B oard then denied their claims, concluding that [t]he DROP benefit is an integral part of the [Retirement System] benefit scheme and that appellants DROP accounts must be assigned to their ex-spouses under their deferred division divorc e decre es. Appellan ts then filed a P etition for a Writ of Mandamus and Complaint for Declaratory Relief and/or Petition for Ju dicial Review in the C ircuit Court for Baltimore City. Appellants sought judicial review of the Board s decision pursuant to Md. Rule 7-202, a declaratory judgment that appellants D ROP b enefits sho uld be disb ursed in fu ll to appellants, and a writ of mandamus ordering the Board to so disburs e their DROP ben efits. After the appellee spouses intervened in the action, the parties filed cross-motions for summary judgment. Ruling on these motions, the court de clared that th e DRO P is subject -5- to the deferred division stated in the parties Judgments of Div orce as a matte r of law , affirmed the decision of the Board of Trustees of the Retirement System, and denied appellants petition for a writ of mandamus. The appellants then noted timely app eals to th e Cou rt of Sp ecial A ppeals . We granted appellants petition for a writ of certiorari prior to decision in the Court of Special Appeals. Dennis v. Fire Retirement, 387 Md. 465 , 875 A.2d 769 (2005). II. In Brown, we deta iled the operation of the Retirement System and the DROP as follows: The Retireme nt System is a governmental pension plan offered by Baltimore City and is codified in Baltimore City Code (2000 Supp .) Article 22. The Retirement System provides several different types of benefits, including service retirement benefits, line-of-duty disability benef its, line-of-duty de ath benefits, ordinary disability benefits, and ordinary death benefits. Membership in the Retirement System is mandatory for all police employees as a condition of em ployment. § 31(1). The Retirement System is funded by the m andatory contributions of its members, by the contributions of Baltimore City, and by the System s investment earnings. A ll benefit-fu nding assets are held under the R etirement System s name and are managed b y a Board of Trustees. T he Board establishes rules and regulations for the administration of the Retirement System s funds and for the transaction o f its business. § 33(g). The Retirement System was amended in 1996 to add the DROP, effective July 1, 1996. § 36B . Members with at least twenty years of service under the Retirement System may elect -6- to participate in the DROP for a maximum of three years. Eligible members who do not participate in the DROP may either retire and collect pension benefits, or con tinue to work and accrue service credit which will be used to calculate th eir retirement income. The D ROP c onsists of thre e compo nents: (1) An amount equal to the annual retirement allowance (or prorated annual retirement allowance for p artia l years) the mem ber wou ld have received if he had retired from service at that time and actually begun receiving his maximum retirement allo wance; (2) An am ount equal to the mandatory contributions the member is required to make to the Retirement System for his retirement benefits; and, (3) Interest at 8.25 % com pounde d annually un til the me mber a ctually retire s. § 36B(d). All mandato ry contributions to the DR OP are p aid to the Board and commingled with all other contributions to the Retirement System. No actual separate account is established, and no fund s are segreg ated. The R etirement S ystem is a tax-qualified plan un der the I nternal R evenu e Cod e. See [I.R.C .] § 401(a) et seq. (2000). All DRO P payments are reported to the IRS on Form 1099R as having been paid from the Retirement System. ****** During the period of DROP participation, the Member s regular pension is f rozen, i.e., the M ember w ill not acquire new service cred it toward the regular pen sion. At the conclusion of the DROP period, the Member s regular service retirement benefit remains the same as when he or she entered the DROP. Various forms of additional service credits and a bonus accrual can be earned after participating in the DROP. -7- Distribution of the DROP benefit depends on how and when the Mem ber retires. If the Memb er elects an ordinary retirement, he or she may receive the DROP benefit as a lump sum or as part of the regular m onthly annuity payment. No part of the DRO P benefit is payable in the event o f a line-of-duty disability or a line-of-duty death. In such cases, the Member or the qualifyin g benefi ciary r eceives only the benefit otherwise payable u nder th e Retire ment S ystem. § 3 6B(k) and (i). Brown, 375 Md. at 665-67, 826 A.2d at 528-29.2 The various f orms of additional b enefits that a Mem ber can rec eive by staying in service after participating in the DROP are depen dent upon how lon g the M ember stays in service after participating in the DROP. If a M ember retires or terminates services immedia tely after participating in the DROP, the Member is entitled to the Basic DROP Retirement Benefit. § 36B(e). The Basic DROP benefit consists of three components: (1) the ordinary service retirement allowance the Member would have received if he had retired at the time he started participating in the DROP; (2) the amount in the Member s DROP account at the time of retirement; and (3) the balance in the member s Annuity Savings Fund subaccount accumulated under subsection (c). Id. The Annuity Savings Fund subaccount consists of the Member contributions to the Retirement System that are required under § 36(h) for Members who are not in the D ROP and are earning service credit. § 36B(c)(1). DROP participants are required to mak e these paym ents while p articipating in the DRO P even tho ugh they are n ot earning s ervice cred it, and the paym ents into the Annuity 2 Section references in this quotation and in the remainder of this section are to Baltimore City Code, Article 22 (2000), unless otherwise indicated. -8- Savings Fund subaccount are credited with interest at the sa me rate as f unds acc umulated in the M embe r s DR OP ac count. Id. If a Member continues in service for less than eighteen months after ending participation in the DROP, then the Memb er is entitled to the Intermediate DROP Retirement Benefit. § 36B(f). The intermediate benefit consists of the basic DROP benefit under § 36B(e), plus one main additional component. The intermediate benefit differs from the basic benefit because it also provides a Member 3.5% of the member s average final compensation . . . for eac h year of service credit, not to exceed 18 months, earned by the member through continuous employment immedia tely following the end of the DROP participation period. § 36B (f)(2).3 If a Member participates in the DROP and then continues in service for eighteen or more months afterwards before retiring, the Member is entitled to receive the Full DROP retirement benef it. § 36B(g). The full DROP benefit provides the recipient with the same benefits as provided by the basic DROP benefit, plus two additional benefits. First, the 3 The average final compensation of a Mem ber is defined in § 30(11 ) for Memb ers retiring after July 1, 1988 as the average annual compensation, pay or salary earnable by a member for the 18 consecutive months of service as an employee during which his earnable compensation was high est. Section 36B(f)(2 ) provides th at compensation earned during the DROP participation period is considered in determining a Member s average final compensation under that subsection. Section 36B(f)(3) also includes in the intermediate DROP benefit 2% of the member s average final compensation for each year of service not already included by the other provisions in § 36B (f). The statute gives as ex amples of service years tha t would be included under this provision service [years] purchased or transferred to this system during or after the DROP participation period. Id. -9- recipient of the full b enefit receives the full ordinary retirement benefit provided by § 34(b) for the years served after terminating participation in the DRO P prog ram. See § 36B(g)(1). Second, the Member receives 1.5% of the member s average final compensation . . . for each year of service credit, not to exceed 4 years, earned by the member through continuous employment immediately following the end of the DROP participation period. § 36B(g)(2 ). III. Appellan ts argue before this Court that payments of DROP benefits are not subject to division under their QDROs because the QDROs fail to reference DROP benefits specifically. Th ey urge us to ap ply the principles of contrac t interpretation to the QDRO s. Appellan ts then argue that application of these principles leads to the conclusion they desire, because the DR OP is a sep arate progra m that prov ides benef its distinct from the pensio n benefits payable from the Retirement System pension plan referenced in appellants QDROs. This is confirmed, they argue, by the fact that the DROP program was not offered by the Retirement System until 1996, several years after the appellants QDROs were entered. According to appellants, this fact shows that appellants and the appellee spouses could not have intended to provide fo r division of DRO P benefit payments in their QDROs, which in turn shows that division of DROP benefits was not a term of their agreements as reflected in their QDROs. -10- Appellees argue that the appellants are mistaken in their claim that the DROP is a distinct program from the pension plan offered by the Retirement System. In support, they point to the facts that the statutory provisions governing the D ROP prog ram are included in the same section of the Baltimore City Code as the rest of the provisions governing the Retirement System, DROP benefit payments are paid out of the same Retirement System trust fund, DROP participants are required to make the same mandatory contributions to the Retirement System as oth er Retirem ent System M embers, an d finally, that the DR OP is treated as part of the Retirement System s pension plan for federal tax purposes. IV. We conclude that the paymen ts of DROP benefits from the Retirement System to the appellants are payments from the [Retirement System] pension within the meaning of the appellants QDROs because of the particular function that QDROs play under the Internal Revenue Code and related federal statutory provisions. A court order entered in a divorce proceeding that orders the transfer of pension benefits from one spouse to another spouse must meet the federal statutory definition of a QDRO if the transfer is to be respected for federal tax purposes. When, as here, parties enter by consent into a divorce decree purporting to be a QDRO, a reasonable person in the position of the parties would intend the terms of the QDRO that are operative in the federal statutory definition of a QDRO to be used as these term s are used u nder the fe deral statute in o rder to fulfill the parties intended -11- purpose of creating a QDRO. The operative language identifying the payments that are subject to division in the appellants QDROs is such language, and hence, it should be constructed in the same way as under the Internal Revenue Code. Therefore, as the DROP benefit payments at issue in this case are payments from the Retirement System s pension plan identified in the QDROs for federal tax and pension purposes, they are s ubject to division according to the terms of the appellants QDROs. A. Qualified D omestic Relations O rders In Rohrbeck v. Rohrbeck, 318 Md. 28, 30-36, 566 A.2d 767, 768-71 (1989), we explained in detail the statutory genesis and function of QDROs. The provisions governing QDROs were adopted by Congress in the Retirement Equity Act of 1984 ( REA ), Pub. L. 98-397, 98 Stat. 1433 (1984). The QDRO provisions in the REA were enacted in response to the pension anti-alienation provisions added to the Internal Revenue Code and to Title 29 of the United States Code by the Emplo yee Retirement Income Security Act of 1974 ( ERISA ), Pub. L. 93-406, 88 Stat. 829 (1974). These anti-alienation provision s require that [e]ach pension plan shall provide that benefits provided under the plan may not be assigned or alienated. ERISA § 206(d)(1) (codified at 29 U.S.C. § 1056(d)(1)). They further provide that a pension plan is not a qualified trust under I.R.C. § 401 unless the plan provides that benefits provided under the plan may not be assigne d or alien ated. ERISA § 1021(c ) (codified at I.R.C. § 401(a)(13)(A)). In addition, ERISA contained an -12- express provision p reempting state laws re lating to emplo yee bene fit plans . See ERISA § 514 (providing that ERISA provisions shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 4(a) and not exempt under se ction 4(b) of this title ) (codified as ame nded at 29 U.S .C. § 1144(a)). The anti-alienation provisions, coupled with the preemption provision, called into question the validity of state court orders entered in domestic relations proceedings transferring pension b enefits. In resp onse, Co ngress am ended the Internal Revenue Code and Title 29 to exempt QDRO s from the anti-alienation provisions. See REA §§ 104, 204. As amended, the Internal Revenue Code and Title 29 provide that the anti-alienation provisions apply to d omestic relation s orders unless th ey are QD ROs. See I.R.C. § 401(a)(13)(B); 29 U.S.C. § 1056(d)(3)(A). Qualified domestic relations order is defined in Title 294 as follows: (i) the term qualified domestic relations order means a domestic relations order (I) which creates or recognizes the existence of an alternate payee s ri ght to, 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 (II) with respect to which the requirements of subparag raphs (C) a nd (D) are met 4 The Internal Revenue Code contains similar provisions relating to QDROs, which differ o nly in their in ternal se ction cro ss-refe rences . See I.R.C. § 414(p). -13- 29 U.S.C. § 1056 (d)(3)(B). 5 Subparagraph (C) of 29 U.S.C. § 1056(d)(3) requires a QDRO to clearly specify four items: (i) the name and the last known mailing address (if any) of the participant and the name and mailing address of each a lternate payee covered by the order, (ii) the amount or percentage of the participan t s benefits to be paid by the plan to each such alternate payee , or the man ner in which such amount or percentage is to be determined, (iii) the number of payments or period to which such order applies, and (iv) eac h plan to which such o rder ap plies. 5 Domestic relations order is defined in Title 29 as follows: [T]he term domestic relations ord er means any judgme nt, decree, or order (including approval of a property settlement agreement) which (I) relates to the p rovision of child supp ort, alimony payments, or marital pro perty rights to a spouse, former spouse, child, or other dependent of a participant, and (II) is made pursuant to a State domestic relations law (in cluding a com munity p roperty law ). 29 U.S.C . § 1056(d )(3)(B)(ii); see I.R.C. § 414(p)(1)(B) (sim ilar definition). Alternate payee is defined as follows: The term alternate payee means any spouse, former spouse, child, or other dependent of a participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benef its payable und er a plan w ith respect to such particip ant. 29 U.S.C. § 10 56(d)(3)(K); I.R.C. § 41 4(p)(8). -14- 29 U.S.C. § 1 056(d)(3)( C); see I.R.C. § 414(p)(2) (imposing sim ilar requirements). Subparagraph (D) of 29 U.S.C. § 1056(d)(3) further provides that a domestic relations order is a QDRO only if the order: (i) does not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan, (ii) does not require the plan to p rovide incre ased ben efits (determined on the basis of actuarial value), and (iii) does not require the p ayment of b enefits to an alternate payee which ar e required to be paid to a nother altern ate payee under another order previously determined to be a qualified dome stic relatio ns orde r. 29 U.S.C . § 1056(d )(3)(D); see I.R.C. § 414(p)(3) (impo sing similar requirements). As we explained in Rohrbeck, the QDRO provisions in Title 29 and the Internal Revenue Code impose requirements on pension plan administrators to ensure that pension benefits are transferred only in the event a valid QDRO is in effect. We stated as follows: The law requires each plan to establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under such qualified orders. 29 U.S.C. § 1056 (d)(3)(G )(ii); [I.R .C.] § 41 4(p)(6) (B). Upon receipt of a domestic relations ord er, the plan administrator must notify the participant and the alternate payee of the receipt of the order and the plan s proced ures for determining its qualified status. The administrator has a reasonable period of up to 18 months in which to determine that status and inform the parties of the decisio n. See 29 U.S.C. § 1056(d)(3)(G)-(H ); [I.R.C.] § 414(p )(6)-(7). Rohrbeck, 318 Md. at 35, 566 A.2d at 771. -15- The ultimate effect of Congress adoption of the provisions relating to QDROs has been to make the QDRO an order of high significance in State d omestic relation s practic e. Rohrbeck, 318 M d. at 35, 5 66 A.2 d at 771 . This is so because it is the only mechanism for successfu lly causing pen sion bene fits to be made payable to an alternate payee, as pension plan administrators will refuse to implement the court s dec ision if a state c ourt attemp ts to transfer pension benefits via a nonqualified domestic relations order. Id. at 35-36, 566 A.2d at 771. B. Construction of th e Parties Qualified Do mestic Relations Ord ers We conclude with respect to both QDROs that the language at issue in the case sub judice should be given the meaning it has under the Internal Revenue Code and the regulations thereunder. We reach this conclusion by application of ordinary contract construction principles to the QD ROs, an d we ap ply such principles because the QDR Os are provisions incorporated into the parties divorce judgments, which are judgm ents entered into by consent. Consent judgments are agreements entered into by the parties which must be endorsed by the court. Chernick v. Chernick, 327 Md. 470, 478, 610 A.2d 770, 774 (1992). As such, [t]he y have attributes of both contracts and judicial decrees. Id. (citing Local 93, Int l Ass n of Firefighters v. City of Cleveland, 478 U.S. 501, 519, 106 S. Ct. 3063, 3073, 92 L. Ed. 2d 405 (1986)). As a judgment, it is enforceable as a judicial decree subject to the -16- rules generally applicable to other judgments and decrees. Long v. S tate, 371 Md. 72, 8283, 807 A.2d 1, 7 (2002) (quoting Rufo v. Inmates of Suffolk C ounty Jail, 502 U.S. 367, 378, 112 S. Ct. 748, 757 , 116 L. Ed. 2d 86 7 (1992)). It does, however, reflect the agreement of the parties pursuant to which they have relinq uished the r ight to litigate th e contro versy. Id. at 83, 807 A.2d at 7. Thus, we look to the parties agreement as embodied in the judgm ent in or der to in terpret it. Id. at 83-84, 807 A.2d at 7-8. In interpreting the parties agreement as embodied in a consent judgment, we have applied the ordinary principles of contract constru ction. See id. at 84-85, 80 7 A.2d a t 8-9; Chernick, 327 Md. at 478-81, 610 A.2d at 774-75. Applying ordinary contract principles to the Dennis and Lubinski QDROs, we conclude that the plain la nguage o f the QD ROs un ambiguo usly provides that all paymen ts from the Retirement System pension to the appellants are subject to division in accordance with the terms of the QD ROs. We further conclude that, to the ex tent there is any question under the QDROs as to whether payments of DROP benefits are indeed payments from the Retirement System pension, the plain language of the QDROs unambiguously makes the scope of the pension benefits covered by the language of the QDROs coextensive with the scope of benefits offered by the Retirement System that are treated as pension benefits under the Internal Revenue Code. Under Maryland la w, the interpretation of a contract, including the question of whether the language of a contract is ambiguous, is a question of law subject to de novo -17- review. Towson v. Conte, 384 Md. 68, 78, 862 A.2d 941, 946 (2004). We have long adhered to the objective theory of contract interpretatio n, giving effect to the clear terms of agreements regardless o f what the parties may ha ve intende d by those term s at the time of contrac t forma tion. Id. at 78 , 862 A.2d at 9 46-4 7. Under the obje ctive theo ry: A court construing an agreement under [th e objective th eory] must first determine from the language of the agreem ent itself what a reasonable person in the position of the parties would have meant at the time it was e ffectu ated. In addition, when the language of the con tract is plain and unambig uous there is no room for construction, and a co urt must presume that the parties meant what they expressed. In these circumstances, the true test of what is meant is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties w ould ha ve thou ght it me ant. General Motors A cceptanc e v. Danie ls, 303 Md. 254, 261, 492 A .2d 1306, 1310 (1 985), quoted in C onte, 384 Md. at 78, 862 A.2d at 947. The language of the Dennis and Lubinski QDROs expressly identifies the pension that is the subject of the orders as the Civil Pension known as the Baltimore City Fire and Police Employees Retirement System. The language of the QDROs also clearly indicates that the app ellee spous es, as design ated alternate payees, are en titled to the specified share of any paym ents ma de from the pen sion to th e particip ant . . . if, as , and when, such paymen ts are m ade. Further, the language of the QDROs clearly indicates that they are intended to be Qualified Domestic Relations Order [s] as de fined in the Re tiremen t Equity A ct of 19 84. Under the definition of Qualif ied Do mestic R elations Order adop ted in the REA , a -18- domestic relations order is a qualified d omestic rela tions order o nly if it clearly specifies . . . each plan to which such order applies. I.R.C. § 414(p)(2)(D) (emphasis added); 29 U.S.C. § 1056(d)(3)(C)(iv) (emphasis added). The QDR Os meet this federal statutory requirement by specifying that they apply to the C ivil Pension known as the Baltim ore City Fire and Police Employees Retirement System. Given this denomination of the orders at issue as Q ualified D omestic Relations Orders, and the federal statutory requirement that the subject plan of a QDR O be clea rly identified in the order, we conclude that a reason able person in the position of the parties at the time the QDRO was entered would have intended this language to identify the plan to which the orders apply, as required by federal statute. Thus, applying the objective theory, we hold that the language identifying the pension plan that is the subject of the QDROs is to be given the meaning it has under the Internal Revenue Code . Appellants, however, would have us ignore the clear language of the QDROs and look to the subjective understandings of the appellee spouses at the time the QDROs were issued to decide whether the DROP is part of the Civil Pension kn own as the B altimore City Fire and Police Employees Retirement System within the meaning of the QDROs. According to appellants, w e should in terpret this language to exclude the DROP from being part of the Retirement System pension plan, because the appellee spouses d eposition testim ony reveals that they did not envision the Retirement System adopting a program like the DROP at the time their QDR Os were entered . The objective theory of con tract interpretation, however, -19- does not permit su ch inquiry into th e subjective intent of the p arties in cases such as this where the contract terms are clear, because under the objective theory the clear and unambiguous language of an agreement will not give away to what the parties thought that the agreement meant or intended it to mean. Conte, 384 Md. at 78, 862 A.2d at 947 (quoting Daniels, 303 Md. at 261 , 492 A.2d at 131 0).6 C. The Treatment of the DROP under the Internal Revenue Code We now turn to the qu estion of whether the DROP is treated as part of the civil pension plan of the Retirement System under the Internal Revenue Code. Appellants argue 6 As w e noted in § I, fn . 1, supra, it is unclear from the record whether the Dennis divorce judgment that included the QDRO was a consent judgment. As we also noted supra, the parties have assumed that it is, but even if it is not, we would still reach the same conclusion we hav e here abo ut the interpre tation of the Dennis QDRO. The relevant language in the Dennis QDRO and the Lubinski QDRO is the same; our conc lusion that this language is clear and unambiguous would apply with equal force to the language in the Dennis QDRO regardless of whether the language was adopted at the behest of the parties or by the c ourt. The language of a judgment not entered pursuant to an agreement reached by the parties is inte rpreted acc ording to its p lain mean ing if the language of the judgment at issue is clear and unambiguous, just as the language of a consent judgment is. See Jones v. Hubbard, 356 Md. 513, 533-34, 740 A.2d 1004, 1015-16 (1999) (if language of decree judgment is plain and unambig uous, it is interpre ted in accor dance w ith what a reasonab le person in the position of the parties, or of the court, would have thought it meant, depending on whether its terms were devised by the parties or by the court (quoting Monticello v. Montice llo, 271 Md. 168, 173, 315 A.2d 5 20, 523 (1974 ), cert. denied, 419 U.S. 880, 95 S. Ct. 145, 42 L. Ed. 2d 121 (1974)). Therefore, even if the Dennis Q DRO was not e ntered into pursuant to agreemen t of the parties , we wo uld still interpret it to su bject DR OP ben efit payments to division in accordance with the terms of the D ennis QD RO if the DRO P is treated as part of the civil pension plan of the Retirement System under the Internal Revenue Code. -20- that the DROP is a separate plan, and th erefore no t subject to the terms of the QDR Os. This posi tion does not hold up under scru tiny. As discussed above, because ERISA provided that a pension plan is gene rally not a qualified trust under I.R.C. § 401 unless the plan provides for the nonassignability of benefits under the plan, Congress added the QDR O provisio ns to the fed eral statute to pe rmit assignme nts of pension benefits in connection with the disposition of dome stic disp utes. A qualified trust is a trust that forms part of a pension, stock bonus, or profit-sharing plan that meets the qualification conditions of I.R.C. § 401(a). Tax qualification under § 401(a) entitles a pension plan and its beneficiaries to various tax advantages. Chief among these are that the pension trust itself is exempted from taxation, I.R.C. § 501(a), and that the employer contributions to the trust on behalf of the beneficiaries are not included in the gross income of the beneficiary in the year of the contribution, but are only taxable to the employee when distributed. Compare I.R.C. § 402(b)(1) (employer contributions to trust result in inclusions in gross income of employee in year of contribution if the trust is not qualified under I.R.C. § 401(a)) with I.R.C. § 83(e)(2) (exempting tran sfers to trusts qualified under I.R.C. § 401(a) from I.R.C. § 83(a), which makes transfers of property by an employer on behalf of an employee taxable to the employee); I.R.C. § 40 2(a) (amo unts distributed to employee from qualified pension trust are taxable to employee in the year of distribution). Furthermore, under government pension plans7 such as the Retirement System pension plan, if the plan 7 I.R.C. § 414(d) defines government plan as a plan established and maintained for (contin ued...) -21- designates a contribution as an employee contribution but picks u p the con tribution, it is treated as an employer contribution for federal tax purposes, I.R.C. § 414(h)(2), and hence is entitled to exclusion from the employee s gross income in the tax year of distribution. I.R.C. § 83(e)(2); Rev. Rul. 77-462. To pick up an employee contribution within the meaning of § 414(h)(2), the employer must specify that the contributions . . . are being paid by the employer in lieu of contributions by the employee, and the employee must not be given the option of choosing to receive the contributions directly. Rev. Rul. 87-10. The regulations under I.R.C. § 401 permit an employer to request a determination letter as to its qualification under section 401. Treas. Reg. § 1.401-1(e). After implementing the DROP in 1996, the Retirement System sought such a determination from the IRS . The IRS then determined that the Retirement System pension plan, including the DRO P, was a qualif ied pen sion pla n unde r I.R.C. § 401(a) . In the instant case, we find persuasive the IRS determination that the Retirement System pension plan, inclusive of the DROP provisions, is qualified under I.R.C. § 401 (a). We believe that in a case like the instant case, where the resolution of an issue of Maryland law depends in part on the resolution of an issue of federal tax law, that an IRS determination such as the determination here under Treas. Reg. § 1.401-1(e) should be afforded a degree of deferenc e similar to the d eference we affo rd to the decisions of Maryland administrative 7 (...continued) its employees b y the Gover nment of the United States, by the government of any state or political s ubdivi sion the reof, or by any age ncy or ins trumen tality of an y of the fo regoin g. -22- agencies. The determination of the IRS that the Retirement System pension plan, inclusive of the DR OP, is qua lified under I.R.C. § 401(a) is a determination of a question of law. Hence, giving the IRS determination a degree of deference similar to that we w ould give it if it were the decision of a Maryland agency, we afford the IRS determination some deference, as it is a conclusion of law concerning a statute administered by the agency that issued the dec ision. See Schwartz v. DNR, 385 Md. 534, 554, 870 A.2d 168, 180 (2005) (although our review of an agency determination of law is de novo, [w]e frequently give weight to an agency s experience in interpretation of a statute th at it administers ); Board of Physician v. Banks, 354 Md. 59, 69, 729 A.2d 376, 381 (1999) ( Even with regard to some legal issues, a degree of deference should often be accorded the position of the administrative agen cy. Thus, an administrative agency s interpretation and application of the statute which the agency administers should ordinarily be given considerable weight by reviewing courts. ) This deference, of course , is not w ithout lim it. See Schwa rtz, 385 Md. at 554, 870 A.2d at 180 ( it is always w ithin our p rerogativ e to d eterm ine w heth er an agen cy's conclusions of law are correct, and to remedy them if wrong ). In the present case, however, appellants have offered no legal argument challenging the IRS determination that the Retirement System pension plan is a qualified plan under I.R.C. § 401(a). Therefore, in the absence of any reasons before us to question the legal conclusion of the IRS that the Retirement System pension p lan is tax-qua lified unde r I.R.C. § 40 1(a), we d efer to it. -23- JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY AFFIRMED. COSTS TO BE P AID BY APPELLANTS. -24-

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