QDRO - what does pro rata mean

[Guest mibella90]

I am going to use simple math. I am to receive $10,000 of my husband's $20,000 401(k) plan. He has worked at multiple companies, but the same fund manager - TIAA-CREF has all 10 of his accounts.

I am to receive my distribution "pro rata" from his 10 accounts. Does this mean I will get $1,000 from each account?

Or say for instance, one account (b/c he worked there the longest) has 40 % of his total account balance i.e. $8,000.

Will I receive 40% of my $10,000 from this main account i.e. $4000?

If it is the $1,000 from each of the 10 accounts, what happens if the one account doesn't even have $1,000 in it - how will the plan interpret that?

[QDROphile]

Except for the fact that you are dealing with TIAA-CREF, where none of the laws or logic of human or nature apply, using your numbers (you are entitled to half of the total balance), you would get half of the banlance of each account.

[Guest mibella90]

Now you have me scared, but I may be so screwed no matter what.

Here is the longer version:

He was supposed to give me 1/2 of his 401K plus 1/2 the money from the equity of our house when he sold the house - lamentably he sold the house for less due to the market and basically cleared no cash. I was awarded a lump sump of this amount as of the day of the divorce, not depending on what he could sell the house for, so we had to back up and punt.

I am receiving now my share of his accounts which we agree is figure x as of the date of the divorce plus figure y (the equity in the house i am owed) added to it. Now we have compensated for taxes and 10 percent penalty to raise the figure, which is why the normal use of "pro rata" seems confusing.

Also at the date of the divorce, he didn't have what he in total owes me - but now he does - so using the normal "percentage of the accounts as of date of divorce" can't be used either.

The order as drafted reads " receive total figure z pro rata from the following six accounts."

so if it is the total figure/6 is how it is broken down - then some accounts don't have a 1/6 share in them, they have less. How can they take 1/6 of the amount I am owed out of an account that has less than that in it.

if pro rata means: he has a total of so much in his "entire portfolio" - the amount i am owed is 40 percent of that net amount - .40 percent of each of the six accounts will be transferred into my name to achieve the target figure - then that is workable - but TIAA-CREF of course won't tell me what pro rata means to them and how they will intepret it.

I don't want the 1/6 pro rata scenario screwing things up - so is there a better way to word it? I am also trying to maintain his ratio of liquid to non liquid assets and if everything is in 1/6 equal shares, then i go for 75/25 to 50/50 liquid to nonliquid. 50 percent of his accounts are liquid - but 75 percent of the overall balance in them is liquid.

If this makes any sense to you - please help a confused girl out! So far you are the only one talking sense to me.

[QDROphile]

If you want $1000 pro rata from five accounts that have a total of $5000, you get 1/5 from each account.

Account 1 has $1000. You get $200, which is 1/5 of the account.

Account 2 has $2500. You get $500, which is 1/5 of the account.

Account 3 has $250. You get $50, which is 1/5 of the account.

Account 4 has $500. You get $100, which is 1/5 of the account.

Account 5 has $750. You get $150, which is 1/5 of the account.

If the account balances change, you still get your $1000 unless the sum of the account balances has dropped below $1000 when the accounts are charged. So if you want $1000 from the accounts and the total is $6000, you will get a different fraction of the acocunt (1/6) and a different dollar amount from each account, but the total for you will be $1000. If the total balance in the accounts is $1000, you get 100% of each account.

I am not dealing with with liquid/illiquid or house vs. retirement plan. I am addressing from the point you know how much you want from the retirement plan. I assume that all the accounts are liquid. No comment on the reference to the 10 percent except that if I were trying to understand the big picture, I would ask more about that conclusion. I am not addressing issues if loans have been taken from the accounts.

[Guest mibella90]

LAST TWO QUESTIONS

My concern with use of the word "pro rata" The money is not evenly distributed in the accounts. - Not all 6 accounts have the same money. Say the break down is the following:

Account A has 20,000

Account B has 10,000

Account C has 5,000

Account D has 2,500

Accout E has 2,500

Account F has 500

Total Account Balance of 40,000

I am owed 20,000 which if done in equal 1/6 shares comes out to 3300 per account.

Now that works for A - C, but not D-F, if PRO RATA means 1/6 equal shares - what will they do given that the 1/6 equal share can't come from DEF? I know I will get 100 percent of them, but what about the rest of the money I am owed? I just explained the part about the house so you would understand the fuzzy math being used. We are trying to fit a round peg in a square hole so the normal I get .50 percent of his accounts isn't going to work. I am using big round numbers to make the math easier, but the real math is not so easy.

Is there a way to word it to be interpreted as follows?

I am owed 20,000 of the 40,000 total in the portfolio

I want to be distributed the following "pro rata" or what is the wording to accomplish the following distribution.

Account A - per account balance's pro rata share is Account A distribution for me - 10,000

Account B, per account balance 5,000

Account C per account balance 2500

Account D - 1250

Account E - 1250

Account F - 250?

This seems like an easy .50 percent of each account, but b/c of the "fuzzy math" needed to add in the equity from the house, I don't know that those terms will work.

THANK YOU SO MUCH FOR THE HELP YOU ARE PROVIDING. TRULY I WOULD BE LOST WITHOUT YOU.

[GMK]

Please read QDROphile's posts again.

Pro rata does not mean that the same dollar amount comes out of each account. It means that you get the same fraction (40%, 50%, 60%, whatever) from each account. You get more dollars from the bigger accounts and less from the smaller accounts. QDROphile detailed an example for you in his second posting.