QDRO: Survivor Coverage for DB Plans

[Guest RW]

QDRO says that AP should get 50% of P's accrued benefit in a DB plan, and AP is considered surviving spouse for QJSA. P starts payments from plan then dies. Before death, P's monthly annuity payments would have been $1000 without the QDRO. Per the QDRO P gets $500 and AP gets $500 (assume survivor coverage cost is free in the DB plan-- just to make it simple). What does AP get after P dies? Does AP get her $500 plus $250 (50% of P's $500)? Or does she just get $500? Does it matter if the payments is a shared payment or a separate interest? What does it matter what it is called in this type of arrangement?

[david rigby]

Looks to me like the AP gets the continuation of $500, but it could be something else. My understanding is that where the QDRO is silent, then you should not impute any benefit. If the benefit has commenced, then the form of payment should be fixed, not subject to change.

The way you have described it, this is what I would interpret:

P has retired with a 50% J&S form of payment of $1000 per month, with $500 continued to AP upon death of P. During P's lifetime, P has assigned half to AP. When P dies, then P's $500 stops and the assigned $500 also stops. But now the survivor $500 begins to AP. Thus, AP sees no change and the plan has not paid out more in total actuarial value. But, be careful that my summary is truly applicable under the terms of your QDRO.

Special request: I believe every QDRO should explicitly address all possible happenings, which would include:

P dies first, before benefits commence,

AP dies first, before benefits commence,

P dies first, after benefits commence, and

AP dies first, after benefits commence.

[Alonzo]

You are probably describing a shared payment QDRO. A separate interest QDRO would usually assign the AP a portion of the accrued benefit, which would pay the spouse a benefit based on HER life expectancy. So, she wouldn't be getting $500, unless she and the participant had the same birthdate.

QDROs are peculiar beasts, and hard to generalize about. The answer to your question lies in the language of your order, and the forms of benefit available under your plan. But the intent of the QDRO is likely to provide the spouse with a level benefit over her lifetime. So the spouse is not likely to get $750.

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[Guest [Pat M]]

A QDRO must specify the amount, start and duration of the specific benefit, i.e., from PT commencement until PT X (death), so the pieces of the QDRO award are distinct. When the AP is awarded a $ or % of a PT's annuity, then it is considered a shared interest QDRO, since it relates to an annuity based on the life of the PT & same commencement.

The separate interest QDRO can be awarded (plan provisions permitting) when the PT has not yet commenced, the AP is granted a $ or % of the PT's benefit, and AP can commence at different time than PT. The AP's award is then based on life of AP. The annuity is a Separate interest & doesn't stop when PT dies.

The distinct survivor annuity would be based on the PT's form of benefit, i.e., 75% J&S or 50% J&S. A survivor annuity on a shared interest QDRO is usually granted to prevent the AP from losing all benefits if the PT dies.

The govt. has given us the language for these various awards in "The Division of Pensions Though QDROs" and Notice 97-11 www.dol.gov/dol/pwba/public/pubs/qdro.htm www.dol.gov/dol/pwba/public/pubs/qdro.htm#appc