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Upset Participant - Can anyone help?


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A client's employee (the Partipant) will soon retire (and become eligible to commence receving pension benefits). A dozen years ago, a QDRO was entered that awarded his now former spouse 50% of his pension benefits, accrued through a date in 2000.

Now, the Participant is remarried. He wants to make a QJSA election with respect to his new spouse.

The client informed him that the plan is obligated to split payments with the former spouse.

Participant is angry.

I'm out of my depth here. Anyone have any thoughts.

Since the Alternate Payee has a right to only 50% of the pension as accrued through [specific month and day], 2000, would it still be possible for the plan to pay the Alternate payee her portion, but ALSO to allow a QJSA election on behalf of the participant and new spouse, only with respect to HIS 50% accrued benefit through the 2000 date PLUS all accruals after that date?

Thanks for any reality check anyone can provide.

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Of course, it depends upon the terms of the plan document, but generally the document is not that specific.

Most of the plans we administer will partition the Alternate Payee's benefit into its own pension subject to life or guaranteed period and life distribution pursuant to the AP's election. This leaves the Participant free to elect QJSA based on the remaining pension and provide for the current spouse.

Splitting the pension check between the parties is reserved for divorces that occur after distribution has commenced. In such a case, the Alternate Payee is normally awarded the full survivor pension and there is nothing left for a second spouse.

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Q- What does the QDRO provide regarding the QJSA benefit? In many plans the survivor benefits are separately allocated and it is possible that the AP received the QJSA benefit for all service of the employee not just service to 2000. (The AP probably received 50% of the retirement benefits accrued through 2000 as a separate benefit.) It is not unusual for participants to allow the AP to receive the entire QPSA/QJSA because they dont understand the value of a contingent benefit at the time of the divorce.

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Just a few thoughts:

What is the question? If the QDRO is valid, then what is the issue? The Plan does not have any choice here. Is the anger of the participant displaced, since he (and/or his attorney) looked at the QDRO when it was still in draft form? Why is the plan/sponsor trying to soothe this anger?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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I agree w/ PAX, not sure what the question is. You need to do what ever the QDRO says and if the QDRO doesn't say, maybe it isn't a QDRO. I've seen lots of results in lots of different QDROs.

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

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