Retirement Benefits Checklist
For All Plans:
This part of the checklist and information requests should be completed as soon as possible and before mediation or negotiations take place.
¨ Request that the plan freeze the participant’s benefit to prevent distributions/withdrawals
¨ Request a Summary Plan Description (SPD)
¨ Request QDRO Procedures and model QDROs
¨ Request complete (i.e., no screenshots) and current benefits statements and/or a benefit estimate
¨ Request complete benefits statements from the date of marriage if the participant worked at the company before marriage or it is anticipated that there will be a separate-property claim
¨ Review all documents received and determine what benefits are available and how they can be divided, specifically:
What type of plan is it (defined benefit vs. defined contribution)?
When is the benefit payable to an alternate payee?
How is the benefit payable (e.g., lump sum, monthly benefit)?
¨ Determine which party is responsible for preparing and paying for the QDRO
For Defined Contribution Plans (e.g., 401(k) plans, profit-sharing plans):
This part of the checklist focuses on considerations specific to defined contribution plans. This information should be determined before coming to an agreement on the division, in order to ensure that what is negotiated is a division allowed under the plan.
Determine the following:
¨ Is the participant fully vested?
¨ Does the plan permit unvested amounts to be divided?
¨ Is there a current outstanding loan? If yes,
What is the outstanding value?
When was the loan taken out?
Was it used for community purposes?
¨ Is there a separate-property claim? If so,
Is it possible to obtain the value at the date of marriage?
Do you have the statements and data needed to do a tracing on the account?
¨ Is there a QDRO review fee charged by the plan? If so,
What is the amount of the fee?
Who can the fee be assigned to (participant, alternate payee, split)?
¨ What method of divisions are allowed (e.g., percentage, dollar amount)?
Note: Many plans will not divide between two dates or perform a calculation (e.g., 50 percent of the balance minus $10,000). It is critical that attorneys know what divisions are allowed to avoid issues when drafting the QDRO.
Note: Some plans will accept only whole percentages, and it is wise to confirm.
¨ What valuations dates are permitted?
Earliest date allowed?
Note: Plans change recordkeepers, and not all data is turned over. If trying to divide the benefit in such a way that a prior date is being used, make sure the information is available.
Special dates of division (e.g., plan will accept only an end-of-month division date)
¨ Should gains and losses be included or excluded?
Note: Gains and losses may be included when the award is a flat dollar amount.
¨ Should the value of any outstanding loans be included or excluded?
For Defined Benefit Plans (e.g., traditional pension plans, cash balance plans)
This part of the checklist focuses on considerations specific to defined benefit plans. This information should be determined before coming to an agreement on the division, in order to ensure that what is negotiated is a division allowed under the plan.
Determine the following:
¨ Is the participant in pay status and already receiving benefits?
¨ If the participant is in pay status, does the form of payment elected provide for survivor benefits?
¨ What is the estimated monthly benefit at normal retirement age based on current salary and service?
Note: Unless otherwise requested, most estimates are run assuming that the participant works until age sixty-five. This will give a much higher benefit amount than what the alternate payee would actually be entitled to, since it includes future salary increases and additional service after the date of divorce.
¨ Is there a separate property component? If so,
What formula should be used? (Berry if not in pay status, Taggart if in pay status)
¨ Should a shared-interest or separate-interest QDRO be used?
¨ Does the plan provide for cost-of-living adjustments?
¨ Does the plan provide for early retirement subsidies?
¨ Does the plan have any other benefits or features that need to be considered?
¨ Are survivor benefits needed to secure the alternate payee’s benefit and if so,
Which survivor benefits?
To what extent?
¨ When can the alternate payee receive the benefit and in what form of payment?
MSA/Decree Language
It is important to remember that a QDRO cannot change the property award. All terms of the division should be in the MSA and decree. If they are not included, they were not awarded.
Also, make sure to use language appropriate for the benefits being divided. Gains and losses should not be referenced for a pension, and cost-of-living adjustments should not be referenced for a 401(k). Improper language can cause issues when drafting the QDRO.
Make sure the following are included in your language:
¨ The full and accurate plan name
Note: Unless the participant works for Fidelity, “Fidelity 401(k)” is NOT the plan name.
¨ The precise method of division
¨ The date of division (typically the date of the MSA or date of divorce)
¨ All features (e.g., loans, survivor benefits) awarded
¨ Who is responsible for the QDRO preparation and submission and for all fees associated with it?
Special Consideration for Defined Contribution Plans:
¨ If gains and losses are not included, determine how to handle the shortfall if the amount available at segregation is less than the amount awarded. Will the QDRO award the alternate payee 100 percent of the account balance in this event? How will the deficiency be handled?
Special Consideration for Defined Benefit Plans:
¨ If the participant is already receiving a monthly benefit, will the participant have to pay the alternate payee the portion of the benefit between the date of divorce and the date the plan starts paying the alternate payee directly? If so, be specific as to how and use enforceable language.