Jump to content

Are retroactive QDRO benefits a thing?


Recommended Posts

Hi everyone,

I may have made a grievous financial error.

Under the terms of my 2013 QDRO, I'm entitled to 100% of the marital share of my ex's pension. His plan's administrator in 2013 told me I'd start getting the pension when my ex retired. (That's my recollection. I'm hoping to find this exchange in writing.)

My ex is now age 62. He became eligible to retire at age 60, with 20 years of continuous service. 

I recently asked him about his intended retirement date. He referred me to his retirement plan administrator, who told me I was eligible to start my benefit "at any time." 

Have I forfeited either 2 or 9 years of pension payments? Is there any possible way for me to get back payment?

My QDRO is below, and the retirement plan is attached.

Thanks for helping me think this through!

Best,
Christie

QDRO EXCERPT
8. The parties and the Court intend this Order to constitute a "Qualified Domestic Relations Order" as defined in Section 414(p)(l) of the Internal Revenue Code of 1986, as amended (the "Code”), and Section 206(d)(3)(B) of the Employee Retirement Income Security ^ct of 1974, as amended ("ERISA").

9. This Order is issued pursuant to Section 20-107.3 of the 1950 Code of Virginia, as amended, which relates to the division of marital property rights between spouses and former spouses in actions for divorce.

10. The Alternate Payee is hereby assigned One Hundred Percent (100%) of the Participant’s total vested account balance under the Plan as of June 1, 2012, plus or minus any earnings and investment gains or losses thereon from June 1, 2012, to the date the Alternate Payee's share is segregated into a separate account in the Alternate Payee's name under the Plan. Such "total vested account balance" shall include all amounts which have accumulated under allof the various accounts and/or subaccounts established and maintained under the Plan on the Participant's behalf. There were no loans against the account as of June 1, 2012. The Alternate Payee's share of the benefits as set forth above shall be allocated on a pro rata basis among all of the accounts and/or investment funds maintained on behalf of the Participant under the Plan. If applicable, the Alternate Payee's share shall be paid from the non-loan assets in the Participant's account(s) on the date that the award is distributed from the Participant's account.

11. As soon as administratively feasible following the determination that this Order as a Qualified Domestic Relations Order, the Alternate Payee’s share as awarded hereunder shall dc segregated and separately maintained in an account established on the Alternate Payee's Behalf and shall additionally be credited with any investment earnings or losses attributable :hereon from the segregation date to the date of total distribution to the Alternate Payee. Notwithstanding the foregoing, the Alternate Payee may elect to receive her benefits in any brm or permissible option under the Plan, including, but not limited to, an immediate lump sum cash payment and/or a direct rollover into an IRA or other qualified retirement account in the Alternate Payee's name.

12. The Alternate Payee shall be eligible to receive payment as soon as administratively feasible following determination that this Order is a Qualified Domestic Relations Order. 

13. If the Participant predeceases the Alternate Payee prior to payment of the Alternate Payee's assigned benefits under the Plan, payment to the Alternate Payee shall  nonetheless be made under the terms of this Order. If the Alternate Payee dies before full payment to Alternate Payee has been made, the amount unpaid shall be made to the beneficiary designated by the Alternate Payee, or if no beneficiary has been so designated, in accordance 

14. No benefits have been previously assigned from the Participant's interest to another alternate payee under another order which has been determined to be a QDRO.

15. This transfer is intended to be a trustee-to-trustee transfer and a non-taxable went to either party; however, if the Alternate Payee elects to receive a direct distribution from he Plan, the Alternate Payee shall be treated as the distributee under 26 U.S.C. Sections 72 and 102 of the Internal Revenue Code on Federal, State and local income tax returns for all retirement benefits and distributions that the Alternate Payee receives due to the benefits assigned herein, and, as such, will be required to pay the appropriate Federal, State, and local income taxes on such distributions. 

16. The Alternate Payee shall notify the Plan Administrator in writing of any change in her mailing address as set forth above.

17. If the Plan is terminated, the Alternate Payee shall be entitled to receive the portion of the Participant’s benefits as stipulated herein in accordance with the Plan's termination provisions for participants and beneficiaries.

18. This Order does not require (i) the Plan to provide any type or form of benefit option not otherwise provided under the Plan; (ii) the Plan to provide increased benefits (determined on the basis of actuarial value); or (iii) the payment of any benefits to the Alternate with Plan provisions. Payee which are required to be paid to another alternate payee under another order previously determined to be a Qualified Domestic Relations Order.

SPD Ret Plan 2010-Dec.pdf

Link to comment
Share on other sites

You did not necessarily "forfeit" any payment amounts as the plan is required to pay you an actuarially equivalent benefit. If you commenced earlier you would have received smaller amounts as they are expected to be paid over a longer period of time. 

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

Link to comment
Share on other sites

Since your ex didn't commence his benefits yet, if you start your benefits before his age 65, your full share will be reduced due to an early commencement. His retirement plan administrator should provide you, upon your request, the calculated amounts of your benefits under scenarios of retiring now and retiring 3 years from now (at his age 65), so you can see what is the reduction, and then decide if you would want to take it.

Link to comment
Share on other sites

You have a number of issues that you need to resolve.  I have cut and pasted your posting and set forth my responses in bold type. 

"I may have made a grievous financial error.

Under the terms of my 2013 QDRO, I'm entitled to 100% of the marital share of my ex's pension. The QDRO language says that you are entitled to "100% of the Participant's total vested account balance under the Plan as of June 1, 2012, plus or minus any earnings and investment gains or losses thereon from June 1, 2012, to the date the Alternate Payee's share is segregated into a separate account in the Alternate Payee's name under the Plan."  This is not 100% of the marital share - it's 100% of the total account and that would include any pre-marital share earned prior to June 1, 2012.  But all of the language of the QDRO is what you would expect to see in a QDRO for a defined contribution plan, a 401(k) Plan for example, not the Employees’ Retirement Plan of the National Education Association, a defined benefit plan.  So either: (i) the QDRO was incorrectly drafted; (ii) or the plan involved was actually intended to address the National Education Association 401(K) Retirement Savings Plan.  You need to review the Agreement signed by the parties, or, if there was no written Agreement (and you did not dictate an Agreement into the record in open court) you need to see what the Judge ordered in the Judgment of Divorce.   So, to state it differently, the QDRO is talking about apples and the Plan is oranges. QUERY:  Are you sure there were not two QDROs issued in the case?   His plan's administrator in 2013 told me I'd start getting the pension when my ex retired. (That's my recollection. I'm hoping to find this exchange in writing.)  This advice from the plan administrator is consistent with what you would expect if the plan was a defined benefit plan AND if you were to receive a "shared interest" in the Participant's benefits.  A shared interest is where you "share" a portion of the Participant's benefit if, as and when he enters pay status.  The formula to determine your share, referred to as the "time value" or coverture formula, would be to take 50% of the amount of Participant's gross monthly retirement annuity and multiply it by a fraction, the numerator is the total number of months during the marriage (not beyond June 1, 2012, in your case IF that is the date of divorce) of accrued creditable service toward retirement, and the denominator of which is the total number of months of creditable service earned as of the date of retirement. 

But there is another option for defined benefit plans - a separate interest wherein you get a share of the pension as if you had been an employee and stopped working and were just waiting for your benefits to start.  See attached explaining the difference between shared and separate.   In a separate interest annuity you can start to draw your share when he reached age 50 AND is eligible to retire regardless of if he retires or not.  In a shared interest annuity you must wait until he retires before you start to receive your share.  In a separate interest annuity your share lasts for your entire lifetime.  In a shared interest annuity your annuity terminates on his death but you then would normally receive a survivor annuity.  The language of your QDRO does not mention survivor annuity benefits. 

QUITE HONESTLY, I DON'T THINK YOU AND THE PLAN ADMINISTRATOR ARE LOOKING AT THE SAME DOCUMENT.  No competent plan administrator would look at the QDRO language you posted and conclude that you were entitled to a shared interest in a defined benefit plan.   Every word of your QDRO language is inconsistent with a defined benefit plan. 

The last time I dealt with NEA my contact was:  Plan Administrator of Defined Benefit Plan:c/o Jim Groves, Sr. Benefits Specialist, 1201 16th Street, NW, Washington, DC 20036, jgroves@nea.org, Jim Groves Voice - (202) 822-7611, HR Office: Tel: 202-822-7600.  

I suggest that you hire a lawyer who knows what he is doing and have him/her go to the Courthouse and get copies of the QDRO(s) entered by the Court, the Judgment of Divorce, the written agreement that you and you former husband signed, or the oral agreement read into the record, and try to figure out what is going on. 

As far as back payments are concerned, that would only apply if the QDRO gave you a separate interest allocation that you could have taken at some prior date that met the "age 50 rule" mentioned above.  But if you didn't take it then you haven't actually lost it.  I you took you share in the past you would have received a lesser amount then for a longer life expectancy.  If you take it now you will receive a larger share for what is now a shorter life expectancy.  From an actuarial standpoint the present value of your share will be the same.   But you first need to figure out what is going on.    

My ex is now age 62. He became eligible to retire at age 60, with 20 years of continuous service. 

I recently asked him about his intended retirement date. He referred me to his retirement plan administrator, who told me I was eligible to start my benefit "at any time." 

Have I forfeited either 2 or 9 years of pension payments? Is there any possible way for me to get back payment?

My QDRO is below, and the retirement plan is attached.

Thanks for helping me think this through!

Best,
Christie

QDRO EXCERPT
8. The parties and the Court intend this Order to constitute a "Qualified Domestic Relations Order" as defined in Section 414(p)(l) of the Internal Revenue Code of 1986, as amended (the "Code”), and Section 206(d)(3)(B) of the Employee Retirement Income Security ^ct of 1974, as amended ("ERISA").

9. This Order is issued pursuant to Section 20-107.3 of the 1950 Code of Virginia, as amended, which relates to the division of marital property rights between spouses and former spouses in actions for divorce.

10. The Alternate Payee is hereby assigned One Hundred Percent (100%) of the Participant’s total vested account balance under the Plan as of June 1, 2012, plus or minus any earnings and investment gains or losses thereon from June 1, 2012, to the date the Alternate Payee's share is segregated into a separate account in the Alternate Payee's name under the Plan. Such "total vested account balance" shall include all amounts which have accumulated under allof the various accounts and/or subaccounts established and maintained under the Plan on the Participant's behalf. There were no loans against the account as of June 1, 2012. The Alternate Payee's share of the benefits as set forth above shall be allocated on a pro rata basis among all of the accounts and/or investment funds maintained on behalf of the Participant under the Plan. If applicable, the Alternate Payee's share shall be paid from the non-loan assets in the Participant's account(s) on the date that the award is distributed from the Participant's account.

11. As soon as administratively feasible following the determination that this Order as a Qualified Domestic Relations Order, the Alternate Payee’s share as awarded hereunder shall dc segregated and separately maintained in an account established on the Alternate Payee's Behalf and shall additionally be credited with any investment earnings or losses attributable :hereon from the segregation date to the date of total distribution to the Alternate Payee. Notwithstanding the foregoing, the Alternate Payee may elect to receive her benefits in any brm or permissible option under the Plan, including, but not limited to, an immediate lump sum cash payment and/or a direct rollover into an IRA or other qualified retirement account in the Alternate Payee's name.

12. The Alternate Payee shall be eligible to receive payment as soon as administratively feasible following determination that this Order is a Qualified Domestic Relations Order. 

13. If the Participant predeceases the Alternate Payee prior to payment of the Alternate Payee's assigned benefits under the Plan, payment to the Alternate Payee shall  nonetheless be made under the terms of this Order. If the Alternate Payee dies before full payment to Alternate Payee has been made, the amount unpaid shall be made to the beneficiary designated by the Alternate Payee, or if no beneficiary has been so designated, in accordance 

14. No benefits have been previously assigned from the Participant's interest to another alternate payee under another order which has been determined to be a QDRO.

15. This transfer is intended to be a trustee-to-trustee transfer and a non-taxable went to either party; however, if the Alternate Payee elects to receive a direct distribution from he Plan, the Alternate Payee shall be treated as the distributee under 26 U.S.C. Sections 72 and 102 of the Internal Revenue Code on Federal, State and local income tax returns for all retirement benefits and distributions that the Alternate Payee receives due to the benefits assigned herein, and, as such, will be required to pay the appropriate Federal, State, and local income taxes on such distributions. 

16. The Alternate Payee shall notify the Plan Administrator in writing of any change in her mailing address as set forth above.

17. If the Plan is terminated, the Alternate Payee shall be entitled to receive the portion of the Participant’s benefits as stipulated herein in accordance with the Plan's termination provisions for participants and beneficiaries.

18. This Order does not require (i) the Plan to provide any type or form of benefit option not otherwise provided under the Plan; (ii) the Plan to provide increased benefits (determined on the basis of actuarial value); or (iii) the payment of any benefits to the Alternate with Plan provisions. Payee which are required to be paid to another alternate payee under another order previously determined to be a Qualified Domestic Relations Order.

Shared v. Separate - 02-18-2022.pdf

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...