JM

QDROphile...completely agree!

The case I was brought in on in LA cost the client $800 to do the 14 year calculation (from their date of separation to current), and the delta on what Fidelity paid the alternate payee vs what they should have was almost $100k difference. The intended judgment was simply for AP to get a $400k from 14 years ago adjusted by gains/losses...Fidelity did their very quick method of allocating gains/losses which yielded $100k less to AP than what it should have been (because Fidelity improperly weighted the contributions in favor of P over that time period). I was brought in to show the court that the AP was not trying to reach over the fence and take what was not awarded to them, I showed everyone the AP did not receive as much as was intended by the court and parties 14 years prior. P agreed Fidelity's calculation was inaccurate and the amended QDRO was entered. I'm not implying this case will have a similar outcome but it's not that costly to update and in my opinion well worth the extra money to ensure accuracy. It can be much more costly to have to go back and fix everything if post-Fidelity calculation the AP (or the P) discovers things were not done as accurately as one would hope!

Hello Mark, If the plan has records going back to the award date (which if they changed record keepers then they may not have them all), but if they do then the QDRO will put the burden of the investment gains/losses calculation the plan itself (which is where Fidelity/Vanguard/Empower comes in). However, just letting them do the calculation is ill-advised. I have testified on this very issue in CA courts that Fidelity/Vanguard/Empower methodology for making this calculation (as others have alluded to above) is flawed. If the market has returned gains then it would be in your favor, if the market has returned losses it would give you more of the losses. Regardless, it is not as accurate as you would expect and therefore I would recommend having someone manually calculate the current award and then revise the QDRO to match. That way you see the amounts now BEFORE you enter into the court order (QDRO).

Gabriel, as a court qualified expert witness (in both equitable division and community property states) in the actuarial valuation and division of retirement plan benefits ((Q)DROs), I agree with everyone's comments above. Yes it is possible to calculate the actuarial present value of your former spouse's interest, which would include any/all survivor benefits, and you could offer an equivalent amount from your 401(k) or IRA to balance, but now you would be giving her a lump sum cash payment via another (Q)DRO and you would be taking on all the risk associated with your defined benefit plan (what if you die very early? Many plans have a higher cost of switching survivor benefits and/or beneficiaries now that you are older, interest rate risk, etc). However, if you and your attorney would like to discuss and even get the actuarial valuation done just to see what the numbers would look like then I can help. If interest you can message me directly and we'll get the ball rolling.

GOOD FOR YOU!! 🏌️‍♂️

Hahaha, that made me chuckle. . David Rigby, do you still provide actuarial consulting in domestic relations matters? I've been providing actuarial valuations and expert witness testimony for all types of plans (public, private, non-qual, federal, etc) for 26 years in CA and now several other states. I enjoy the work and helping people hopefully reach settlement.

Hi Bill, I checked with my colleague in NY and she said to please refer you over to her for assistance in vacating your prior COAP (Court Order Acceptable for Processing). Her name is Erin Colgan and she is an attorney with Angiuli & Gentile, LLP. (https://www.aglawnyc.com/attorney/colgan-erin-k/) She deals with (Q)DROs in NY and will be able to get you going down the right path. Cheers, JM

Hi Bill, if the intent was to keep your former spouse eligible for FEHB then the award should have been $1/mo in both your retiree annuity as well as a $1/mo FSSA (former spouse survivor annuity). I prepare those orders all the time and honestly, it's worth keeping intact just in case.

MIchelleMaz, what type of plan are you talking about? ERISA or a public retirement? The calculation depends in part on what type of plan we are talking about because some public plans do allow you to do a shared interest DRO (becuase they do not permit a separate interest), and then some also allow you to carve out the former spouse's share via the coverture fraction first and then have a J&S applied to only that portion of former spouse's awarded share. So in that instance you would apply the coverture fraction first, apply the J&S factor to former spouse's share only and the participant can retire without a J&S applied to their remaining share. I do a lot of pension valuations for all types of plans in community property and equitable distribution states so I can say there is no single answer until we have more detail on which plan is being divided!

There are no regs on who pays the cost in a QDRO for the QJSA elected at retirement and I think it's more of a state issue, not federal. For example, in CA an election made at retirement that includes a survivorship cost is not deemed a gift from participant to alternate payee upon divorce. So if the plan is an ERISA plan in which a reversion is required (if AP dies first they cannot name a beneficiary and must revert back to P), then we have the parties split the survivorship cost which balances the fact that the AP is getting a survivor benefit but also that P is getting the "quasi" survivor benefit (the reversion). Actuarially speaking it's approximately equal if the parties elected the 50% J&S and are somewhat close in age. If non-ERISA and a public DB plan then we can assign the full cost of the survivorship to the former spouse and also say they can name a beneficiary if they predecease the P (no reversion).

Emme, contact the law offices of Anne P. Schmidt in Chicago. Top notch employee benefits and QILDRO attorney.

Hello broomrider, You should outline in the Judgment/Divorce Decree that the survivor benefit and you as beneficiary are irrevocable (which is the case in 99% of ERISA defined benefit plans) so that you have that clearly defined in a court order. A QDRO is only needed to divide the payment while the participant is alive, so you do not need a QDRO to secure the irrevocable survivor benefit...but if you are worried than you can put a simple QDRO together that lists the plan name, your names and addresses and that your former husband is awarded 100% of the benefit while he is alive, and should he predecease you, you get the 75% J&S as irrevocably elected at retirement. That should do it.

LadyjaneM10, it sounds like are referencing both the BP 401k and a BP defined benefit plan (thus the segment rates in your last post outlining the possible partial lump sum with residual monthly pension). These are two separate and distinct types of retirement accounts for which Fidelity handles the QDRO administration. I agree with Mr. Bailey in that you need to have your attorney help you on this. If your share of the 401k was cashed out by your ex then it is possible to increase your award from the defined benefit plan (if that is the only asset left), such that you get your share of the pension plus your share of the cashed out 401k all from the defined benefit (provided there is a sufficient accrued benefit under the defined benefit plan to satisfy this actuarial adjustment).

Some states have statutes that permit a court order to address marital financial concerns in an intact marriage...so through that applicable statute and a private judge I've seen In Marriage QDROs in the past...and I do not believe ERISA/IRC really prevents a QDRO with a spouse as we all know that is part of the definition of an alternate payee. These types of QDROs are not sham divorces but they are somewhat sham QDROs in my opinion. Mostly financial planners and estate planners are using them and of all the QDRO attorneys I know in multiple states, not one is preparing In Marriage QDROs. Personally I would stay clear as a QDRO drafter but it's interesting to see the plan side of things. I do not believe a plan can look behind the curtain if the order otherwise qualifies as a QDRO issued by a state court.

check Fidelity's website for help in generating the 401k QDRO: https://nb.fidelity.com/public/QDROFormGen/home#/qdro/main/home