Form 25-3

This form may not be used if the participant is already in pay status and can be used only for partici­pants who have not yet retired.

Caveat: No form or model QDRO should be used as a substitute for the knowledge necessary to divide a retirement benefit. Each plan has different requirements, so this form must be modified depending on the plan. Be very careful in drafting a qualified domestic relations order. It is advisable to get the help of an expert to prepare the order and to prequalify the qualified domestic relations order with the plan administrator before the order is signed by the judge. Approval by the plan does not mean that the QDRO was prepared in accordance with the decree or the negotiated division, but only that it meets the requirements for a QDRO under ERISA.

This form is designed to be used only for the preparation of an order dividing a defined benefit private retirement plan that is a qualified plan under ERISA. It is recommended that this order be signed at the same time as the decree to avoid complications and additional costs for the client.

Before drafting a defined benefit plan QDRO, it is essential to understand the difference between a shared-payment (shared-interest) QDRO and a separate-interest QDRO. These terms are widely used by plan administrators, model QDROs, and publications on QDROs. See the practice notes at section 25.46. This form is to divide a separate-interest defined benefit plan. For a form to divide a shared-interest plan, see form 25-4.

A QDRO may be used for the division of marital property, child support, spousal maintenance, or ali­mony. This model QDRO should be adjusted accordingly, depending on the purpose of the QDRO.

NOTICE: THIS DOCUMENT
CONTAINS SENSITIVE DATA

[Caption. See § 3 of the Introduction in volume 1 of this manual.]

Qualified Domestic Relations Order

[Private Retirement Plan—Defined Benefit—Separate-Interest]

IT IS HEREBY ORDERED:

1.Designation as QDRO

Effect of the Order as a Qualified Domestic Relations Order

This order shall be incorporated into and shall become an integral part of the [name of order] signed in this case as if recited verbatim in the decree. This order creates and recognizes the existence of an alternate payee’s right to receive a portion of the participant’s benefits payable under an employer- sponsored defined benefit pension plan that is qualified under section 401 of the Internal Revenue Code (the Code) and the Employee Retirement Income Security Act of 1974, as amended (ERISA). This order is intended to constitute a qualified domestic relations order (QDRO) under section 414(p) of the Code and section 206(d)(3) of ERISA.

This order is entered pursuant to the authority granted in the applicable domestic relations laws of Texas concerning [marital property rights/child sup­port/spousal maintenance/alimony/[specify combination]].

2.Plan Information

The Plan

The name of the plan to which this order applies is the [formal name of plan] (the “Plan”). Further, any successor plan to the Plan or any other plan(s) to which liability for provision of Participant’s benefits described below is incurred shall also be subject to the terms of this order. Any benefits accrued by Participant under a predecessor plan of the employer or any other defined benefit plan sponsored by Participant’s employer, where liability for benefits accrued under such predecessor plan or other defined benefit plan has been transferred to the Plan, shall also be subject to the terms of this order. Any changes in the plan administrator, plan sponsor, or name of the Plan shall not affect Alternate Payee’s rights as stipulated under this order.

3.Participant Information

Participant Information

Following is the identification and contact information of the participant (“Participant”):

Name:

Social Security number: See Addendum

Birth date: See Addendum

Address:

4.Alternate Payee Information

Alternate Payee Information

Following is the identification and contact information of the alternate payee (“Alternate Payee”):

Name:

Social Security number: See Addendum

Birth date: See Addendum

Address:

Alternate Payee is the [spouse/former spouse/child/dependent] of Participant.

Participant and Alternate Payee shall have the duty to notify the Plan Administrator in writing of any changes in their mailing address subsequent to the entry of this order.

The parties were married on [date of marriage], and they were divorced on [date of divorce].

The date of division of Participant’s benefit under the Plan is [date of division].

5.Definition of Terms

Definition of Terms

“Earliest Retirement Age” has the meaning given that term by section 414(p)(4)(B) of the Code, which means the earlier of—

1.the date on which Participant is entitled to distribution under the Plan, or

2.the later of—

a.the date Participant attains age fifty, or

b.the earliest date on which Participant could begin receiving benefits under the Plan if separated from service.

“QPSA” means a preretirement survivor annuity as provided under the terms of the Plan or otherwise as defined in section 417(c) of the Code.

“QJSA” means a qualified joint and survivor annuity as provided under the terms of the Plan or otherwise as defined in section 417(b) of the Code.

6.Division of Benefits

Division of Benefits

This order is a separate-interest QDRO, and the benefit shall be paid over the lifetime of Alternate Payee.

6.A.Percentage

6.A.1.When Benefits Are All Community Property

This order awards, assigns, and grants to Alternate Payee an amount equal to [percent] percent of Participant’s accrued benefit under the Plan as of [date of division].

Alternate Payee [shall/shall not] receive a proportionate share of any cost-of-living adjustments (COLAs) or other economic improvements made to Participant’s benefits.

6.A.2.When Benefits Are Not All Community Property

This order awards, assigns, and grants to Alternate Payee an amount equal to [percent] percent of the community-property portion of Participant’s accrued benefit under the Plan as of [date of division]. The community-prop­erty portion is determined by a fraction, the numerator of which is the number of months of credited service earned between [date of marriage] and [date of division], and the denominator of which is the total number of months of credit service earned as of [date of division].

Alternate Payee [shall/shall not] receive a proportionate share of any cost-of-living adjustments (COLAs) or other economic improvements made to Participant’s benefits.

6.B.Dollar Figure

This order awards, assigns, and grants to Alternate Payee a portion of Participant’s vested accrued benefit under the Plan as of [date of division], in an amount equal to $[amount] per month, which shall be further adjusted to incorporate any actuarial adjustments necessary for early retirement, optional benefit forms, or the adjustment of payments to the life expectancy of Alter­nate Payee.

7.Preretirement Survivor Annuity

Preretirement Survivor Annuity

Notwithstanding the language set forth above in this section, if Alternate Payee becomes entitled to a QPSA under this order, Alternate Payee’s right to a share of Participant’s benefits shall be terminated as of the date of Partici­pant’s death, and the preretirement death benefit shall be payable to Alternate Payee in lieu of any other benefits to which Alternate Payee may be entitled under the terms of this order.

8.Temporary or Supplemental Benefits

Temporary or Supplemental Benefits

Alternate Payee [shall/shall not] be entitled to a proportionate share of any early retirement supplements, interim supplements, or temporary benefits that become payable to Participant that are not considered by the Plan Admin­istrator to be a part of Participant’s accrued benefit as set forth in the assign­ment section of this order.

If Alternate Payee is entitled to a proportionate share of any early retire­ment subsidy provided under the Plan, and Alternate Payee elects to begin receiving the benefit before Participant’s commencement, Alternate Payee will be entitled only to the unsubsidized portion of the assigned benefits. When Par­ticipant retires, Alternate Payee’s benefit will be recalculated to include a pro­portionate share of any early retirement subsidy that may be payable.

9.Commencement Date and Form of Payment to Alternate Payee

Commencement Date and Form of Payment to Alternate Payee

Alternate Payee may elect to commence Alternate Payee’s benefits under the Plan at any time on or after the date Participant attains the Earliest Retirement Age. Alternate Payee’s assigned share of the benefits is to be actu­arially adjusted for early retirement according to the terms of the Plan.

Alternate Payee may elect to defer commencement of the benefits awarded until the latest date allowed by the Plan. Alternate Payee may elect to commence benefits in any one of the allowable benefit distribution options permitted under the terms and provisions of the Plan, other than a QJSA with Alternate Payee’s subsequent spouse as the beneficiary.

If Participant predeceases Alternate Payee after Alternate Payee’s bene­fit commencement date, Participant’s death shall not affect Alternate Payee’s right to Alternate Payee’s continued benefits.

Early Commencement

Should any early commencement reduction be necessary if Alternate Payee commences benefits before Participant’s normal retirement date, that reduction shall be applied to Alternate Payee’s benefits in accordance with applicable Plan provisions.

10.Death of Participant

Death of Participant

10.A.Plan Does Not Require QPSA

As this is a separate-interest QDRO, the death of Participant at any time will not affect Alternate Payee’s right to receive the benefit awarded in this order.

10.B.Plan Requires QPSA

10.B.1.Participant’s Death before Benefit Commencement

Death of Participant before Benefit Commencement Date

10.B.1.a.Alternate Payee Not Deemed Surviving Spouse

If Participant predeceases Alternate Payee and neither Alternate Payee nor Participant has commenced benefits under the Plan, Alternate Payee shall not be deemed to be the surviving spouse of Participant for any purpose.

10.B.1.b.Alternate Payee Deemed Surviving Spouse

If Participant predeceases Alternate Payee and neither Alternate Payee nor Participant has commenced benefits under the Plan, Alternate Payee shall be deemed to be the surviving spouse of Participant for purposes of the prere­tirement survivor annuity, [in an amount equal to Alternate Payee’s assigned interest as set forth in the assignment section of this order/in an amount that is proportional to Alternate Payee’s share of the pension benefit awarded/for any and all preretirement surviving spouse benefits], and any subsequent spouse of Participant shall not be treated as a surviving spouse of Participant for those purposes. For purposes of determining the eligibility for such surviving spouse benefits, Alternate Payee and Participant have satisfied the one-year marriage requirement in sections 401(a)(11) and 417(d) of the Code and as may be required under the provisions of the Plan. If the costs associated with providing this preretirement survivor annuity benefit are not fully subsidized by Partici­pant’s employer, Participant must make an affirmative election for such prere­tirement survivor annuity benefits coverage in a timely manner and in accordance with the employer’s election procedures. If Participant terminates [his/her] employment before retirement, Participant shall still be required to maintain the preretirement survivor coverage in place for the benefit of Alter­nate Payee. At all times, Participant shall do all things necessary to maintain the preretirement survivorship coverage that protects Alternate Payee’s bene­fits.

10.B.2.Participant’s Death after Benefit Commencement

Death of Participant after Benefit Commencement Date

Pursuant to the terms of the commencement section of this order, Alter­nate Payee’s benefits are based on Alternate Payee’s life expectancy. Once Alternate Payee commences Alternate Payee’s assigned share of the benefits in accordance with the terms of this order, Alternate Payee’s right to continued benefits shall be unaffected by the subsequent death of Participant.

11.Death of Alternate Payee

Death of Alternate Payee

If Alternate Payee predeceases Participant before the commencement of Alternate Payee’s benefits, Alternate Payee’s share of Participant’s benefits shall become payable to Alternate Payee’s designated beneficiary(ies) or estate, but only to the extent permitted by the Plan. If the Plan does not permit Alternate Payee to designate a beneficiary, beneficiaries, or Alternate Payee’s estate for such purposes, Alternate Payee’s assigned share of the benefits shall [revert to Participant/inure to the Plan]. Should Alternate Payee predecease Participant after Alternate Payee’s benefit commencement date, such remain­ing benefits, if any, will be paid in accordance with the form of benefit elected by Alternate Payee.

12.Participant Constructive Trustee

Participant Constructive Trustee

If the Plan pays to Participant any benefits that are assigned to Alternate Payee pursuant to the terms of this order, Participant is designated a construc­tive trustee to the extent that Participant has received such benefit payments and shall immediately return, within three days of receipt by Participant, the amounts so received directly to the Plan.

13.Savings Clause

Savings Clause

This order is not intended and shall not be construed in such a manner as to require the Plan to—

1.provide any type or form of benefit or any option not otherwise provided under the Plan,

2.provide increased benefits (determined on the basis of actuarial value), or

3.require the payment of any benefits to Alternate Payee that are required to be paid to another alternate payee under another order that was pre­viously determined to be a QDRO.

14.Tax Treatment

Tax Treatment of Distribution

For purposes of sections 402(a) and 72 of the Internal Revenue Code, any Alternate Payee who is the spouse or former spouse of Participant shall be treated as the distributee of any distribution or payments made to Alternate Payee under the terms of this order and, as such, will be required to pay the appropriate income taxes on such distribution.

15.Continued Jurisdiction

Continued Qualified Status of Order and Continued Jurisdiction

It is the intention of the parties that this qualified domestic relations order continue to qualify as a qualified domestic relations order. The Court shall retain continuing jurisdiction over the parties and property to the extent necessary to render an amended or corrected domestic relations order for the payment of benefits to Alternate Payee.

16.Effect of Plan Termination

Effect of Plan Termination

If the Plan is terminated or partially terminated, whether on a voluntary or involuntary basis, Alternate Payee shall have the right to receive Alternate Payee’s assigned benefits in accordance with the terms of this qualified domes­tic relations order and the termination procedure of the Plan and, if applicable, the Pension Benefit Guaranty Corporation. Alternate Payee’s benefits shall also be guaranteed to the same extent in accordance with the Plan’s termina­tion rules and in the same ratio as Participant’s benefits are guaranteed.

17.Separate Property

Separate Property

The benefits payable to Alternate Payee pursuant to this order shall be the separate property of Alternate Payee, and Participant is hereby divested of all right, title, and interest in that property. The Plan benefits not assigned to Alternate Payee pursuant to this order shall be the separate property of Partici­pant, and Alternate Payee is hereby divested of all right, title, and interest in that property.

18.Documentation and Information

Documentation and Information

Participant shall sign and return, within three days of a written request from Alternate Payee, any and all documentation necessary for Alternate Payee to receive Alternate Payee’s benefits assigned to Alternate Payee in this order.

19.Application of the Order

Application of the Order

This order relates to the period that starts with the execution of this order by the Court and ends when all benefits assigned to Alternate Payee have been distributed, in full, from the trust or other funding vehicle of the Plan, in con­formity with the provisions of this order.

20.Conflict

Conflict

In the case of a conflict between the terms of this qualified domestic relations order and the terms of the Plan, the terms of the Plan will prevail.

SIGNED on ___________________________________.

   
JUDGE PRESIDING