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Download and Prepare a QDRO Form for a 401k, Pension, IRA or Savings Plan


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Accrued Benefit:

The extent of plan benefits that have been earned by a Participant through a particular date.

Deferred Retirement Option Plan: Arrangement pursuant to which an employee who would otherwise be entitled to retire and receive benefits under an employer's defined benefit retirement plan instead continues to work. However, instead of having the continued compensation and additional years of service taken into account for purposes of the defined benefit plan formula, the employee has a sum of money credited during each year of the continued employment to a separate account under the employer's retirement plan. The account earns interest (either at a rate stated in the plan, or based on the earnings of the trust underlying the retirement plan). The account is paid to the employee, in addition to whatever benefit the employee has acquired under the defined benefit plan based on earlier years of service, when the employee eventually retires.

Defined Contribution Plan: (also known as an "individual account plan") An account specified for the individual employee where a defined amount is being contributed to the plan by the individual, the employer or both. Examples of this type of plan include: 401(k) accounts, Employee Stock Ownership Plans (ESOP), Employee Savings Plans and Profit Sharing Plans.

401K Plan: A qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. Employers offering a 401(k) plan may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis.

Employee Stock Ownership Plan (ESOP): Employee benefit plan which makes the employees of a company the owners of stock in that company.

Employee Savings Plan: A savings plan is a retirement plan whereby the employer, employee or both make contributions towards an individual account established on behalf of the employee.

Employee Benefit Plan/Defined Benefit Plan: Any written purchase, savings, option, bonus, appreciation, profit sharing, thrift, incentive, pension or similar plan or written compensation contract solely for employees, directors, general partners, trustees (where the registrant is a business trust), officers, or consultants or advisors. The term applies to both Employee Welfare Benefit Plans and Employee Pension Benefit Plans.

Employee Pension Benefit Plan: Any plan sponsored by an employer to provide either (a) retirement income; or (b) deferral of income until the termination of employment or beyond.

Employee Welfare Benefit Plan: Any plan, fund, or program sponsored by an employer to provide life insurance, death benefits, unemployment benefits, vacation benefits, medical care, day care, scholarships, legal services, and various other benefits that are described in Section 3(1) of the Labor Management Relations Act (LMRA).

ERISA (EMPLOYMENT RETIREMENT SECURITY ACT): The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for retirement and health benefit plans in private industry. ERISA does not require any employer to establish a plan. Rather, it mandates that those who establish plans must meet certain minimum standards.

ERISA covers retirement, health and other welfare benefit plans (e.g., life, disability and apprenticeship plans). Among other things, ERISA provides that those individuals who manage plans (and other fiduciaries) must meet certain standards of conduct. The law also contains detailed provisions for reporting to the government and disclosure to participants. There also are provisions aimed at assuring that plan funds are protected and that participants who qualify receive their benefits. Because of certain preemption and spendthrift provisions in ERISA, retirement plans such as pensions, profit sharing and 401k plans must be distributed though a special type of order known as a QDRO.

Participant: Any employee or former employee of an employer, or member or former member of an employee organization (e.g. a union) who is or may become eligible to receive a benefit of any type from an employee benefit plan or whose beneficiaries may be eligible to receive any such benefit.

"Pay Status": A pension "in pay status" is one in which the participant has already retired and is presently receiving benefits. A pension that is "not in pay status" is one in which the participant has not yet started collecting monthly benefits from the plan.

Pension: The term "Pension" refers to a traditional, defined benefit plan. The traditional plan provides a retiree with a monthly payment beginning at retirement for the remainder of the retiree's lifetime. The benefit payable upon retirement is calculated using a formula that is defined within the context of the plan. A defined benefit plan is the type of plan most commonly thought of when describing pensions. It is paid monthly for the lifetime of the retiree upon retirement. Because the benefit to be received is defined or "known", it is considered a defined benefit plan.

Plan Sponsor: (i) the employer in the case of an employee benefit plan established or maintained by a single employer, (ii) the employee organization in the case of a plan established or maintained by an employee organization, or (iii) in the case of a plan established or maintained by two or more employers or jointly by one or more employers and one or more employee organizations, the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan. (See 29 U.S.C. § 1002 (16).

Profit Sharing Plan:

Qualified Domestic Relations Order (QDRO):

Under ERISA a Qualified Domestic Relations Order "QDRO" is a Domestic Relations Order "DRO" that creates or recognizes the existence of an Alternate Payee's right to, or assigns to an Alternate Payee the right to receive all or a portion of the benefits payable to a Participant under a Plan. The DRO must meet the following additional requirements:
  1. it must contain the names and mailing addresses of the Participant and Alternate Payee;
  2. it must clearly set forth the amount or percentage of the Participant's benefits;
  3. it must set forth the number of payments or period to which the Order applies;
  4. it must refer to each Plan to which the Order applies;
  5. it must NOT require a Plan to pay any type or form of benefit, or any option not otherwise provided under the Plan;
  6. it must not require the Plan to provide increased benefits determined on the basis of actuarial value.
  7. it must NOT require a Plan to pay benefits to an Alternate Payee that are required to be paid to another Alternate Payee under another Order previously determined to be a QDRO.
Orders relating to these non-ERISA Plans are not "Qualified" and are simply called "Domestic Relations Orders" or DROs. They may be subject to state law or agency policy prior to acceptance and approval by the governmental plan.

Separate Interest Approach: One of the methods for dividing a Participant's interest in an employee Benefit Plan. If this approach is used, the Participant's accrued benefit in the plan is valued as of a specified valuation date (for example, the date on which the divorce action was commenced) and split into to parts. The Alternate Payee has control over when, and in what form, he or she receives the payments.

Shared Interest Approach: One of the methods for dividing a Participant's interest in an Employee Benefit Plan. If this approach is used, the payments: (a) start when the Participant chooses; (b) are paid in the form that he or she chooses; and (c) terminate completely upon the participant's death unless the QDRO designates the Alternate Payee as the spouse of the Participant for the purpose of electing a Qualified Joint and Survivor Annuity on the Lives of the Participant and Alternate Payee.
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