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The Correct Plan Name - When drafting a QDRO make sure you have the corrcet plan name or it may be rejected.
QRDO Policy Issues - General Overview - Some 84 million Americans work for companies that maintain ERISA-covered retirement plans that are divisible by QDROs, yet in the event of divorce, spouses opt for buyouts far more frequently than QDROs.
A Buyout Versus a QDRO - Pension buyout Vs. a QDRO. An important Decision to Make when getting a divorce and distributing the assets.
Obtaining a QDRO (Qualified Domestic Relations Order) - The terms and conditions of the QDRO must be set forth in the martial settlement or divorce decree. At a minimum, the decree should set forth the amount or percentage of the benefit to be assigned from the worker-participant, identity the plan(s) from which the benefits are to be assigned; and also other material facts, such as whether the alternate payee is to be named as surviving spouse for purposes of a joint and survivors annuity; when the benefits are to be divided; and whether any postretirement subsidies are to be included.
QDRO Issues - General Overview for Defined Benefit Plans - The preparation of a QDRO for a defined benefit pension is much more demanding and difficult than one for a defined contribution plan because there are more issues that must be carefully considered. Among the issues that must be determined are...
Cash Balance Plans - A New Type of Plan - QDRO Preparers drafting QDROs now must contend with a new type of retirement plan called a "cash balance pension plan," a hybrid that is not really the fish of a traditional defined benefit plan, nor the fowl of a defined contribution plan.
Post-Marital Benefit Enhancements - A Well-Crafted QDRO Is a Must - Sometimes when couples defer the distribution of retirement benefits, disputes arise later because the nonemployee spouse contends she should receive a share of subsequent increases. This is why property settlement agreements should be clearly and carefully written, particularly when the agreements involve a QDRO.
Survivor Benefits Should be Considered - ERISA-governed defined benefit plans generally carry two types of survivor benefits. One, known as a Qualified Preretirement Survivor Annuity (QPSA), is a survivor annuity that begins of the worker spouse dies before retirement, and the other, a Qualified Joint and Survivor Annuity (QJSA), is one that is based on the worker’s election at retirement.
Active and Passive Appreciation of Pension Benefits - Courts sometimes consider the active and passive appreciation of premarital and marital pension rights in classifying pension benefits. Active appreciation is an increase in the value of an asset as a result of its owner’s action, such as refurbishing a property or, in some cases, the skillful management of investments; passive appreciation is an increase in the value of an asset as a result of changes in the market.
Deferred Compensation Packages - Divisible in Divorce - Many companies establish nonqualified deferred compensation packages that provide supplemental retirement income to top management and highly paid individuals through company contributions and deferred salary.
Property Division - Social Security Offset - In Hisquierdo v. Hisquierdo, 439 U.S. 572 (1979), the U.S. Supreme Court firmly placed Social Security outside the marital estate for purposes of property division. Yet in at least eight states -- Iowa, Kansas, Maine, Massachusetts, Missouri, Ohio, Pennsylvania and Washington -- Social Security has entered the domestic relations area as courts, struggling to achieve an equitable distribution of property, consider the disparate income streams of older divorcing couples.
Disability Pensions - A Problem for Equitable Distribution - Disability benefits, compensation paid workers who become disabled as a result of work or accidents on the job in the form of a pension, can be difficult to classify and divide in a divorce.
Bankruptcy Protection for the Participant and Alternate Payee - All divorce lawyers know that the bankruptcy of one or both spouses is always a consideration in an divorce.
Railroad Retirement Benefits - The Railroad Retirement Board (RRB), a New Deal agency of the United States Government, administers the retirement, survivor, unemployment and sickness benefits to America’s railroad workers.
Present Value - Nothing Gets Cheaper - Present value is the time value of money. Present value means a restatement in current dollars of future payment -- for example, the distribution of a pension -- to a current lump-sum equivalent. Money compounds based on the rate of return, which is the time value of money.
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