What's Appropriate in QDRO

[Andy the Actuary]

Participant age 65 is getting divorced from 80 year old spouse. Participant started pension 15 years ago on Joint & 100% survivor basis. Monthly amount is $1,000.

(1) If QDRO assigns 1/2 monthly pension, then participant gets $500 and spouse gets $500 and the Plan wins because 500 ax + 500 ay < 1000 (ax + ay - axy)

(2) If QDRO assigns value, then spouse should get 500 (ax + ay - axy) / ay and member should get 500 (ax + ay -axy) / ax but can this be done without a plan amendment?

Comments welcome.

[QDROphile]

I advise plans against allowing the benefit to be reformed. The order must split the payments in some way

[david rigby]

Agree with QDROphile.

Why not have the participant pay alimony of whatever portion is desired, for participant's lifetime. Or if there is alimony going the other way, just offset.

[Effen]

I agree with QDROphile that the payment form should not be adjusted into a seperate interest.

Since the current form is a J&100, can the QDRO call for a 50/50 split until the first death, then 100% to the survivor? That way it isn't a gain or loss to the plan, but it might created some unwanted incentive for someone to do bad things.

[AndyH]

Whatever the approach used, the plan should not win or lose. The QDRO should state that the payments are actuarially adjusted for the differences in ages. The plan liability should be the same before the QDRO as after, on a sex neutral basis. IMHO.

[mbozek]

Agree with QDROphile.

Why not have the participant pay alimony of whatever portion is desired, for participant's lifetime. Or if there is alimony going the other way, just offset.

Most states have abolished alimony for life in favor of maintainence payments for a limited periiod.

I also dont understand the OP's problem. Court can divide participant's benefit so that participant and ex each get 50% (500) during the participant's life and then give ex the $500 survivor benefit. Plan does not have to provide for separate share to ex after retirement payments have begun.

Q- what does the plan QDRO procedure say about how benefits are to be divided.

[QDROphile]

One reason not to reform the benefit is adverse selection. If a participant with a single life annuity gets a diagnosis, the plan does not want a QDRO giving 100 percent of the benefit value to the soon to be former spouse.