valuing a benefit for QDRO

[dmb]

A participant (age X) is currently receiving a monthyly benefit payable as a joint & 2/3 Survivor benefit with the cavaet that if he outlives his spouse (age X-1) he receives a $100 increase in the benefit. Per divorce settlement, each party is to receive half of value as of specific date. I know i haven't provided many specifics, but does it sound reasonable that after the settlement the participant would receive a monthly benefit that is less than half of the original amount?? I can provide more info outside the board. Thanks.

[Effen]

Did he elect and commence retirement payments before or after the date of seperation?

I'm not sure what you mean by "half of value as of specific date"? Assuming he was in-pay status at the time of seperation, I'm not sure how relavent the "value" of his/her retirement benefit is. Generally, he can't change his election and the Plan shouldn't allow him to. Therefore, the QDRO needs to work within the restrictions of the payment form he elected.

[dmb]

The participant began receiving payments prior to the divorce. The participant is looking for the amount of reduction of his benefit after his former wife receives her half of the value of the benefit.

[QDROphile]

The plan or the written QDRO procedures should dictate how benefits in pay status can be divided. The usual approach is to limit the division to splitting the payments, not dividing the value of the benefit. The usual approach has many virtues.

[dmb]

What was provided to me in an e-mail was that "the Decree provides that the parties are to each receive a portion of the pension equal to 50% of its value" as of a certain date and they want to know how much the current benefit needs to be reduced based on that.

[QDROphile]

The decree can't make the plan do what the plan is not designed to do. It is almost unheard of that a DB plan would allow a change in the form of benefit after the start date. Any order to the contrary is not qualified and is ineffective. See section 414(p)(3) of the Internal Revenue Code.

They may be asking you to come up with a value for the purpose of deciding what portion of each payment the former spouse should get, but I think they are fooling themselves about the ability to get a "right" answer. I suppose you can't just tell them they are fooling themselves, look at the payment stream and be done with it.

[dmb]

QDROphile , is there a way to contact you outside this board??

[QDROphile]

You could send a message through the message function of the board, but I probably would not respond and I probably cannot help you with actuarial fine points anyway.

To paraphrase what Warren Beatty said about Madonna, if I can't pontificate in public, what would be the point?

[dmb]

I appreciate the help, but I have received a better explaination of what is being asked for and right now I'm working on the more detailed actuarial work. Thanks again.