Amending QDRO

[Gabriel]

I am re-married. I have a QDRO from my divorce some years ago that names my ex-wife to joint & survivor benefits from my pension. I did not realize that this meant ex-wife would receive lifelong benefits. I was younger and emotional and bad lawyer if I knew that is what it meant I would have never agreed to this. Fast forward I hired a QDRO attorney who suggests I offer ex-wife a lump sum to cover her interest for the years we were married and age differential in exchange for ex-wife to remove herself from the survivor benefits. Ex wife concern is that if she removes herself, she could potentially get no payments if I were to pass away. Does this seem like a good option to offer? My pension would accept a modification, and I heard it's better to have agreed upon new QDRO in order for court to accept it. Any advice?  

[Effen]

Put yourself in her position, would you accept your offer? You would need to give your ex-wife something of higher value in order for her to forfeit something she already has.  Not sure why either of you would be willing to do that.

Your ex-wife is only entitled to the survivor benefits on the value of benefits you earned during your marriage.  Your current wife is eligible for the survivor benefit you earned outside of the first marriage.  

Not saying it isn't possible, but I have never seen anyone change a QDRO after it has been accepted. 

[david rigby]

Yep.  BTW, there is no "...if I were to pass away".   Each of us will pass away, with certainty.  Also, be careful about the degree to which she is named as a survivor for J&S purposes.  It might be all, or only a portion, of your ultimate benefit.  If it's only a portion, then your subsequent spouse will be the survivor for the remaining portion.  In case it isn't clear to you, "survivor benefit" means she does begin receiving until after your demise.

Note there are many possible permutations of the various contingencies.  For example, if SHE has concerns about her own health, then she might be willing to take something now.  Similarly, if YOU have doubts about the health of yourself and/or your spouse, that might lead you to different concerns. 

[fmsinc]

See my comment in bold type. 

I am re-married. I have a QDRO [Without knowing the name of the Plan it is difficult to answer your questions.  In some plans, e.g., FERS and CSRS,  you ex-wife's remarriage will result in a permanent loss of her survivor annuity benefits. In some plans, e.g. Military, remarriage of your ex-wife prior to age 55 will result in a suspension of survivor annuity benefit if her new marriage ends in divorce or the death of her new husband prior to age 55.  You use the word QDRO which would indicate that you have an ERISA qualified plan, but many people use "ERISA" in a generic sense, e.g. Kleenex when it may actually be Scotties or Puffs. And even if it is an ERISA qualified plan, if you remarried and retired prior to the entry of the QDRO, your new wife and not your ex-wife would be entitled to your survivor annuity benefits. And without knowing the method by with you ex-wife's share is computed we cannot figure the present value of her future benefits in order to formulate a settlement offer.     

from my divorce some years ago that names my ex-wife to joint & survivor benefits from my pension. [The joint and survivor annuity required by law is not less than 50% of your retirement annuity, some plans offer 66.6%, 75% and 100%, and some people will agree to 25% or 33.3%.]  I did not realize that this meant ex-wife would receive lifelong benefits. I was younger and emotional and bad lawyer if I knew that is what it meant I would have never agreed to this. Fast forward I hired a QDRO attorney who suggests I offer ex-wife a lump sum to cover her interest for the years we were married and age differential in exchange for ex-wife to remove herself from the survivor benefits. Ex wife concern is that if she removes herself, she could potentially get no payments if I were to pass away. Does this seem like a good option to offer? My pension would accept a modification, and I heard it's better to have agreed upon new QDRO in order for court to accept it. Any advice?  [There are two components of you ex-wife entitlement: (i) a share of your retirement annuity generally computed by the time rule formula, that is: 50% of your retirement annuity multiplied by a fraction (the coverture fraction) where the numerator is the number of months during your marriage that you accrued retirement benefits, and the denominator is the total number of months during your employment that you accrued benefits.  So, for example, if you monthly retirement annuity is $10,000 (unknown until you actually retire), and if the number of months during the marriage is 120 months and the total number of months is 360 months (unknown until you actually retire), then the formula is .5 x $10,000 = $5,000 x 120/360 = $1,666.67 to your ex-wife. Compute the present value of her payout and you might find out it is worth less than you think.  The second component is the survivor annuity payable to your ex-wife after your death.  Since women live 5 to 6 years longer than men, if you compute the present value of the survivor annuity it might also be less than you think.  And if you're lucky and die with you boots on in your office she will get nothing. And she might just die before you do.  So you see how many variables there can be.] 

 

[More. I don't believe the plan can accept a modification unless it's in the form of an Amended QDRO. I doubt that your consent would be enough, but who knows.  Since you have a new wife the Plan Administrator owes her a fiduciary duty as a potential Alternate Payee and your new wife would have to consent to the Amended QDRO and would likely need to hire a her own attorney for advice.  And depending of where you live, there may restrictions of the ability of the Court to amend a QDRO, e.g. statute of limitations, the doctrine of laches, the expiration of the time for an appeal of the original Judgment of Divorce, the failure of the Judgment of Divorce to reserve the Court's jurisdiction to amend the QDRO and the underlying Judgment of Divorce, or the fact that the Amended QDRO  is not intended simply to  clarify the underlying Agreement of the parties  or the Judgment of Divorce, but is designed to change the terms of the underlying Agreement or Judgment of Divorce - not permitted in may states.  And if you live in a community property state or in Louisiana nothing I said in this post may relevant.] 

 

[Your lawyer is on the right track, but make sure he/she considers the matters I have  commented on above.]

 

 

[Artie M]

We're all different but why do you care if she is getting life long benefits?  As one of the posters stated she is likely only getting the marital portion of the benefit (the portion that accrued during your marriage).  You and your new spouse will be getting the other portion.  If you pay her a lump sum payment, you would still be giving her the same present value and, if I am her lawyer, a little more.  It's not like YOU are cutting her a check every month.

[JM]

Gabriel, as a court qualified expert witness (in both equitable division and community property states) in the actuarial valuation and division of retirement plan benefits ((Q)DROs), I agree with everyone's comments above.    Yes it is possible to calculate the actuarial present value of your former spouse's interest, which would include any/all survivor benefits, and you could offer an equivalent amount from your 401(k) or IRA to balance, but now you would be giving her a lump sum cash payment via another (Q)DRO and you would be taking on all the risk associated with your defined benefit plan (what if you die very early?  Many plans have a higher cost of switching survivor benefits and/or beneficiaries now that you are older, interest rate risk, etc). 

However, if you and your attorney would like to discuss and even get the actuarial valuation done just to see what the numbers would look like then I can help.   If interest you can message me directly and we'll get the ball rolling.