QDRO Specificity re: Calc. of Benefit

[Christine Roberts]

Is a DRO under a DB plan approvable as a QDRO when, in defining how the present value of participant's accrued benefit is calculated, the DRO incorporates by reference the applicable terms of the Plan? Or must the DRO actually recite the mortality and interest assumptions?

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[david rigby]

I don't think either is required. But that may depend on what you are trying to accomplish with the QDRO.

If the DB plan is traditional, then it defines an accrued benefit which is (probably) expressed as a monthly or annual lifetime benefit commencing at normal retirement age. The plan defines how a lump sum is calculated, and when or if such lump sum is payable. I don't think the QDRO can change that.

[Guest hank]

Pax makes an important point. The DRO won't be a QDRO if it attempts to provide a distribution option (lump sum) that isn't available under the DB plan. If I was drafting the QDRO AND the plan permitted a LSD, I'd sure want the plan's equivalence assumptions to be set forth in the QDRO, if only to protect the parties' counsel and the plan administrator when one or both of the parties decides they are unhappy with the property settlement (this seems to happen a lot!)

[Chester]

What happens if the QDRO establishes benefits to be paid in the future, and the plan's actuarial equivalence and/or lump sum rates are specified in the QDRO, and the plan's actuarial equivalence and lump sum rates are eventually amended? Wouldn't the QDRO also need to be revised at that point if benefits are still to be paid in the future?

[david rigby]

Chester, that is exactly the point I was trying to get at. I'm not sure that amending the QDRO makes sense, especially on a practical level. If there were a need to amend the QDRO in that situation, why not simply write the QDRO more generically in the first place.

[Christine Roberts]

Perhaps Pax is suggesting that citing to the applicable plan provisions may be the best route - although in the particular case I am working on the benefits will be distributed very shortly as the participant spouse is over age 65.

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[david rigby]

Yes Christine that is what I am suggesting. In fact, I would not alter that advice at all just because the participant's retirement and/or distribution date may be imminent.

[This message has been edited by pax (edited 03-01-2000).]