QDRO...Ex dies Before retirement Age

[Guest She]

Hi there...

If anyone could help me out, I would appreciate it.

I was divorced 12 years ago. In the divorce settlement, it stated that I was to get 54% of my (ex) husband's pension benefits. Recently, I realized that my lawyer did not file a QDRO, so I gave her a call. She immediately responded, and filed it in August of this year.

Just in case a copy was not sent to my ex's company, I personally sent a letter and copy of the QDRO to them.

The next month, in September my ex died in an accident.

After one more month, in October, (since I did not receive a reply,) I called his company. They said they did not receive a QDRO. So once again, I wrote another letter and sent a copy of the QDRO. This time I sent it by certified mail. They got this one.

My Ex died BEFORE he was able to draw his retirement. He had to wait 1 1/2 years before he was eligible.

My ex did not remarry, and he did not have any beneficiaries or etc. appointed.

The QDRO states that I am the alternative payee, and I was assigned a benefit equal to 54% of his benefits.

It also states that I can start receiving pension benefits at the earliest payout time, which would be in 1 1/2 more years.

and...

*Prior to the commencement of benefits to the alternate payee, the alternate payee shall be treated as the surviving spouse for purposes of the qualified pre-retirement survivor annuity with regard to 100% of the participant's accrued benefits.

Can you tell me what this means?

Today I received a call; I was told that they would be sending me application papers, but there was no hurry for me file them..

Ok...The amount that they told me that I would receive is $205.15 per month. This does not seem right. It seems very low. I was told that he did not sign up for joint survivor benefits. Because he died before receiving his retirement, will I get a lesser amount?

I am very confused. I am not even for sure what questions that I should be asking.

Thanks,

She

[K2retire]

Your attorney should be able to help you ask the appropriate questions -- and also ask the plan administrator for them.

[david rigby]

Yes, your attorney should, but she might not. Here is an example of what might be your situation:

- Suppose your ex had earned a benefit of $1000. Assuming this is a defined benefit pension plan, that (probably) means he could retire at 65 and receive $1000 per month for his lifetime. This lifetime benefit (usually) includes no survivor benefit.

- Instead, if he retired early (e.g. age 55), he could receive the same benefit, but reduced to reflect the longer period of payment; in this case, the monthly amount may be about $500.

- Upon retirement, he gets the option of receiving a lesser monthly amount in order to guarantee a continuing benefit to a surviving spouse. If that continuation is half of his benefit, then the result might be $450 to him and $225 to the spouse (paid to her only if she survives him). The reduction from $500 to $450 is the "cost" of providing the benefit guarantee to the spouse.

- If the person is vested in his benefit (even if no longer an employee of the company) the plan must provide a similar guaranteed spouse benefit even if he dies before reaching retirement age. In my experience, a large majority of plans use that definition as a default.

Just a guess: the benefit due to you is based on his accrued (earned) benefit, reduced to reflect early retirement date, also reduced to reflect an assumption that he elected a payment form to provide the 50% surviving spouse benefit, and also reduced for the 50% to the spouse.

[Bird]

It also might be that they are reducing the benefit to 54% instead of giving you the full 100% that the QDRO appears to grant you. Quite a few missing pieces. If they didn't tell you how they came up with $205.15, ask them. Ultimately you're going to need more support from your attorney, and/or maybe an actuary, but feel free to post more info here so we can help point you in the right direction.

[Guest She]

I really appreciate your help. I spent hours reading about pensions and plans before I found this awesome board; I received more information from you in just a few paragraphs. Thank you all for replying.

You guesses seem very accurate. He was offered a 25 year and out plan, in which he could start drawing his pension at age 59 1/2. I do know that he did not sign any papers to indicate how he wanted to set up his pension payments, nor did he designate a beneficiary. If I had not had a QDRO, his pension benefits would have died with him.

I also wonder if they provided a "Death Benefit" of some kind. His son paid for his funeral.

The lady that I talked with (from his company) also mentioned two other figures. They were $398.83, $373.00, and $205.15. She was unclear on the amount that I was going to receive. I wonder if these figures depend on what age I decided to start drawing on his pension or on his age?

If that is the case, how do you decided at what age you should start drawing the pension. I am in very good health, and all of the women in our family live to be over 100. Excluding an accident, I know that I will probably reach that age, too. I still have another 50 years or so to live.

Within the next week, I should be receiving more information from my ex's company. I'll get back with you when I know more details.

I trust everyone is having a Great Day,

She

[My 2 cents]

There could be the possibility that the plan charges participants for pre-retirement death benefit coverage, but the participant and spouse would have to affirmatively elect out of coverage for their to be no coverage.

The smallness of the benefit payable could be due to the sequence of adjustments spelled out by David Rigby.

Feel free to ask the plan administrator for information concerning how they arrived at the amount quoted. That is a reasonable request and one, I believe, that must be honored. After you see how they got there, it may look more reasonable. If it was not arrived at in the manner described by Mr. Rigby, check back here with some details.

[Guest She]

Hello, once again. Today I received a letter from my ex's company. It stated that I was entitled to a retirement benefit, which can be started in 1 1/2 year. (When my ex would have turned 60.)

In the letter it states: "We have performed this calculation reflecting paragraph 6 of the QDRO, assuming that Ms. (me) is Mr. ____'s surviving spouse and that he elected a 55% joint and survivor benefit immediately prior to his death."

Paragraph 6 in the QDRO states: "Prior to the commencement of benefits to the alternate payee, the alternate pay shall be treated as the surviving spouse for purposes of the qualified per-retirement survivor annuity with regard to 100% of the participant's accrued benefits between March 15, 1975 (the date of the marriage) and July 26, 2001, (the date of the judgment of Dissolution of Marriage).

I don't believe that he choose a 55% joint and survivor benefit immediately prior to his death. I am sure that he had not contacted them at all. )

When I first called his company, I was told that he had not signed any papers, and did not designate a beneficiary.)

Is this standard for a per-retirement benefit?

Factors of Optional Forms of Benefit...

Early Retirement Adjustment - ------- 0.6400

55% Joint and Survivor - ------- 0.9350

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Monthly Benefit Calculation...

Life Annuity Benefit Payable on Normal Retirement Date* - Participant $623.33

(*please note that we have relied upon service credits earned from March 15, 1975 to July 26, 2001 provided by our company)

Life Annuity Benefit Payable on Benefit Commencement Date - $398.93

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Life Annuity Benefit Payable of BCD: ----------------- Participant $398.00 ---- Survivor N/A

Supplemental Allowance (until age 62) ----N/A

55% Joint and Survivor Benefit Payable on BCD -----Participant $373.00 -----Survivor $205.15

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

1. Does the 55% percent figure reflect the standard Pre-retirement Death Benefit?

2. Do I have the option of waiting a few more year until he would been 62 or 65? Would this make a difference in what I would receive?

Thank you so much. I need to know that his company is being straight we me.

I trust everyone had a great Holiday.

She

[david rigby]

Likely, no election has been made. Probably, 55% is the plan's default percentage. Because he died, no other options are available.

Yes, you can defer commencement of your benefit, and it will increase the monthly amount.

The amounts you provide appear to be sensible:

623.33 x .64 = 398.93, his benefit assumed payable at age 60

398.93 x .935 = 373.00, his benefit at age 60 assuming the 55% surviving spouse form of payment

373.00 x .55 = 205.15, your benefit at his age 60 (equivalent to assuming he retired on his 60th birthday and died immediately)

[Please note that no one here has the ability to verify the original amount, 623.33.]

[Guest She]

Dear David,

Thank you so much.

I have been thinking about this for a while, and pulled my original divorce papers. I am entitled to a part of my ex's pension. (-the time that we were actually married. which was calculated at the time of the divorce.)

The divorce papers states that I am to receive $325.00 per month, regardless if my ex decided on early retirement or not. The amount paid to me was to stay the same.

His company pension plan says that he could have taken early retirement at 60 at a rate of 86.6%. At 61, he would have gotten 92.8%, but at age 62, he was entitled to 100%.

I know that he did not change to a 55% joint retirement benefit, which they assumed that he picked. He did not.

Even if he did, I would think that the divorce papers and QDRO would take precedent ?

The court ordered that I was to receive a set amount of $325.00 per month. and if he died before before getting benefits, I would be treated as a (100%) surviving spouse, in regards to the pre-retirement benefit.

Because he died before drawing his retirement, does this change the amount that the court ordered for me? Wouldn't it stand to reason that they would be obligated to pay me a higher percentage amount?

Now I am wondering if I wait 3 1/2 years (when he would have drawn full benefits at 100%), if I would be better off.

...or if it would not make a difference? (I can start drawing benefits in 1 1/2 years.) Would my pension amount be more?

Am I entitled to $325.00 or can they cut this amount due to my age and his?

Would it be unreasonable to send them a copy of the divorce decree and ask them to calculate this for me?

Thanks again.

She

[david rigby]

Difficult to know, but my guess is that the $325 benefit due to you is based on the presumption that he actually survived to retirement age. Since he did not, that means the plan's death benefit provisions apply, and the $325 is no longer relevant.

The QDRO statement that you are to be treated as the "surviving spouse" means the plan's default death benefit will treat you as if you had not been divorced. Why is this important? Some plans (don't know about your husband's plan) define a pre-retirement default death benefit as payable only to a surviving spouse; if there is no spouse, there is no death benefit. Per your own phrasing, this QDRO statement is relevant "in regards to the pre-retirement benefit"; thus, it identifies you a surviving spouse and does not create any other rights for you.

You might get a different benefit if you provide a copy of the divorce decree, but be warned that many plan administrators will only act on a QDRO. If there is any reason to believe they do not yet have that, send a copy; if they already have it, no need for a second copy. Based on your earlier comments, it appears the plan's pre-retirement death benefit definitions are the only relevant portion of the plan to define your benefit.

By all means, be sure your attorney reviews your QDRO and all correspondence from the plan. I'm not qualified to give legal advice.

[Guest She]

I have appreciated your comments. At least now I know what question that I should ask, and yes, I will run this by my attorney.

I trust that you are having a good day,

She