ANSWERS TO FREQUENTLY ASKED QUESTIONS REGARDING
DEFINED BENEFIT PLANS (PENSIONS)

1. Should the alternate payee receive a pro-rata share of any post-retirement cost of living adjustments (if offered by the plan)?
   
   
2. Should the alternate payee be treated as the surviving spouse of the participant if the participant dies prior to retirement?
   
   
3. If the alternate payee dies prior to commencement of benefits, what happens to his/her share?
   
   
4. Should the alternate payee receive a pro-rata share of any early retirement supplements, interim supplements or temporary benefits that become payable to the participant which are not considered by the Plan Administrator to be a part of the participant's accrued benefit?
   
   
5. Should the alternate payee receive a pro-rata share of any early retirement subsidies?
   
   
6. Should the alternate payee be treated as the surviving spouse of the participant, to the extent of the marital property component, in the event the participant dies prior to reaching retirement?
   
   
7. Should the alternate payee receive a postretirement survivor annuity if the participant predeceases the alternate payee after the date of their benefit commencement?
   
   

ANSWERS TO FREQUENTLY ASKED QUESTIONS REGARDING QDRO FORMS

How Can an Alternate Payee Avoid Having His or Her Benefits Cut Off Upon the Death of the Plan Participant?

The Problem:

Many plans provide "model orders" - most of which contain language that is highly prejudicial to the rights of the Alternate Payee. In particular, the plans' model QDRO forms typically provide only for the distribution of payments using the Shared Interest Approach. When this approach is used, the Plan Participant has total control over the timing of the receipt of payments by both the Participant and Alternate Payee.

The Solution:

Typically, an Alternate Payee will benefit from a QDRO form that used the "Separate Interest Approach," which gives Alternate Payee (rather than Plan Participant) control over the timing of payments to him or her. Under a QDRO that uses the Separate Interest Approach, the Alternate Payee may elect to receive payments at any time, even if the Plan Participant has not yet retired (provided that the Participant has attained the Early Retirement Age as set forth by the Plan). The Alternate Payee receives payments for the duration of his or her life - even after the Participant's death.

What Information is Required in a QDRO?

An exhaustive list is not practicable because of the different types of QDRO's and variations in language and terms based on the circumstances in particular cases. However, the following is a partial list and will be required in all QDRO's:

• State the Names, social security numbers and addresses of both the Plan Participant and the Alternate Payee;
  
  
• Identify the relationship between the Plan Participant and Alternate Payee (spouse, former spouse, child).
  
  
• Identify the particular state domestic relations law that controls the issuance of the order, and the order's purpose (maintenance/alimony; division of marital property; alimony);
  
  
• Identify the name of the Plan;
  
  
• If the QDRO is being issued for purposes of distributing marital property and/or alimony or maintenance, it must set forth the date of the parties' marriage and date of divorce; if it is being issued in connection with a child support order, it must set forth the date of the birth of the subject child[ren];
  
  
• Starting and ending dates, or events, for payments to the Alternate Payee that will be issued under the QDRO.
  
  

What Issues can Result in the Rejection of a QDRO by a Retirement Plan?

To be a valid QDRO, the domestic relations order must comply with specific requirements set forth in ERISA. See, e.g., 29 U.S.C. §§ 1056(d)(3)(C), (d)(3)(D) (2000). The domestic relations order meets those requirements only if the order "(i) does not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan"; and "(ii) does not require the plan to provide increased benefits (determined on the basis of actuarial value)." 29 U.S.C. §§ 1056(d)(3)(D)(i), (d)(3)(D)(ii) (2000).

If a domestic relations order contains a provision requiring a plan to pay more than it would otherwise be required to pay to the participant, or provide a benefit not provided for under the plan, it may be rejected by the Plan.