Lump Sum and QDRO

[Guest mom1921]

Can you please help me. My husband is age 65. I am age 51. I was granted 100% of his accrued benefit, that was a lump sum of $200,000 if he took it and a monthly benefit of $1390.00. I just received papers today from CBS that tells me that it is now only worth a lump sum of $92,000 or $501.00/month. I knew there would be calculations involved, but not this adverse. Please advise. Every Excel calculation I do and every annuity assumption I do does not equate to these numbers.

[Guest mjb]

Can you please help me. My husband is age 65. I am age 51. I was granted 100% of his accrued benefit, that was a lump sum of $200,000 if he took it and a monthly benefit of $1390.00. I just received papers today from CBS that tells me that it is now only worth a lump sum of $92,000 or $501.00/month. I knew there would be calculations involved, but not this adverse. Please advise. Every Excel calculation I do and every annuity assumption I do does not equate to these numbers.

While I will let the actuaries answer this question, where did you get the assumptions that you are using? The only valid interest and mortality assumptions to determine the value of a lump sum are the ones used by the plan. It is also possible that your benefit is $501 per month instead of his accrued benefit of $1390 a month because the 14 year difference in your ages means that the benefits will be paid to you 14 years befor it would be paid to him at 65. In other words the actuarial equivalent of a $200,000 present value of a $1390 monthly benefit commencing to your ex at 65 has a value of $92,000 to you today because it is discounted for the time value of money of the benefit that would be paid in 14 years.

[david rigby]

I agree with mjb's suggestion as a plausible explanation.

[Effen]

You have a right to see and understand the calculation. You should ask for a copy of the calculation and the plan document and have it reviewed by a local actuary. Your attorney should be able to recommend one.

That said, $1,390 per month for life to someone who is 65 would have a lump sum value of around $200K. If you truly were to receive 100% of the accrued benefit, your lump sum should also be around $200K, but your monthly annuity would probably be in the $1,000 range. (This is because you are 14 years younger than your ex-spouse and therefore you will most likely live longer and therefore your monthly payment will be less, but the lump sum value will be about the same).

$501 per month for life to someone age 51 would have a lump sum value of around $90,000.

Typically QDRO's split the benefit that was earned during the marriage 50/50. It looks to me like you are probably receiving about 50% of his benefit. You should double check the QDRO to make sure you are to receive 100% of his benefit. If so, you should contact the Plan Administrator and your attorney.

Also, were you married during the entire time he worked for CBS? It is possible he earned a portion of this benefit when you were not married? If he did, you are most likely not entitled to any benefit he earned before or after you were married.

The QDRO holds the answer to what your benefit should be, but you may need to get a few more people involved to determine if they offered you the correct amount.