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#11
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This seems to be another case of advisors thinking they know something about a very specialized and complicated area. As for "a lawyer qualified in this area", the AP obviously didn't know she needed one, and her lawyer was apparently too sure of herself to ask for help, but even then, most pension actuaries who know anything about QDROs also know that there are very few "lawyers qualified in this area" and even the few who exist know that a pension actuary can still be very helpful with details. But I'm still wondering if there is anyone who might be able to come up with a reasonable explanation for a switch in life basis without a benefit adjustment? (BTW, when the P finally did retire, the Plan did reduce his age 65 benefit by exactly $1,363.15. It seems that they still used his life basis for the QDRO reduction, but it appears that, as the AP asked me, "did they take more away from him than they gave to me?" On the surface of things, it appears that they at least didn't give her 6 and one-half years of benefit payments by delaying her commencement to her age 65 (actuarial adjustments not included).) And not to be sassy Helen, but it makes no difference at all what other property awards were, the QDRO specifically awarded 50% of the P's benefit. 50% of the P's benefit was an amount payable at his age 65 for 10C and his life thereafter. The question was, and remains, how can that be interpreted to be that same dollar amount but payable at her age 65 for 10C and her life thereafter? When asked by the AP, the lawyers, and the court (if it ever comes to that), it is impossible, as an experienced pension actuary and based on what I currently understand about the Plan and actuarial science, that my answer would be anything other than that it doesn't make actuarial sense that it could be. The face of the QDRO does not give the impression that the benefit payable to the AP should be any less valuable than the benefit not paid to the P.
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"Don't worry about the world coming to an end today. It's already tomorrow in "We created an environment where we didn't know what we were doing, but it was legal and making profits."(Bill Sharon, chief executive of Sorms) "As soon as we solve one problem, another one appears. So let's try to keep this one going for as long as possible." (Pepper...and Salt, WSJ, 5/4/2011) |
#12
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The order may specify a dollar amount of monthly benefit payable to the AP in any form that the plan allows. Describing the amount as 50% of the participant’s monthly benefit is not the same as describing it as a benefit actuarially equivalent to 50% of his accrued benefit, which is how you seem to interpret it. I’m sorry if I confused you with my example of a situation where it might be appropriate to award the AP less than 50% of the value of the pension. The QDRO of course only applies to the pension benefit but it is part of the overall settlement in the divorce decree.
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#13
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I have heard of QDROs being administered in an informal way without adjustments. This usually happens when a PA administers a QDRO without discussing it with plan counsel and the plan actuary. |
#14
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I wouldn’t jump to a different interpretation without being directed to do so by plan counsel. This is my pat answer, as a practitioner, to the question of how to interpret ambiguous instructions in QDROs. Someone has to give me specific directives to lead me to something else. |
#15
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![]() Discrete, I'd agree, since this QDRO specifically awards a portion of the participant's Accrued Benefit, that defines it as an amount payable in a certain way beginning at a certain time, just as the Plan definition of AB does. Very frequently I have conversations with clients (lawyers and individuals) who only think of the dollar amount as their "benefit", without any thought about when it is payable or what the contingencies are for the continuation of those payments. If a QDRO, for whatever reason, defines an award as a specific dollar amount (or the result of some formula), it still must define a starting date and a payment form in order to be complete.
If the Plan allows it, the award can be paid out as a separate interest which ought to be actuarially equivalent to the award of the portion of the P's benefit. In order to pay a separate interest benefit, there has to be a new benefit scheme for the new life (the AP's), with appropriate changes as needed to the start date and the form of payment. There is no way that I can figure out how the Plan changed the life basis and delayed payment by 6.5 years and did not change the benefit amount, especially using unisex mortality and no reference to different mortality rates for a beneficiary. It ought to be obvious that a strict interpretation of an award of a portion of the P's benefit means that the calculated amount is still payable to (e.g., shared with) the AP when it would have started for the P and it would stop when it stopped for the P (subject to the 10C in this case). I'd even go so far as to say that should the AP die first, unless there is a contingent AP named, that the shared amount reverts to the P (obviously not true if the "separate interest" process is followed).
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"Don't worry about the world coming to an end today. It's already tomorrow in "We created an environment where we didn't know what we were doing, but it was legal and making profits."(Bill Sharon, chief executive of Sorms) "As soon as we solve one problem, another one appears. So let's try to keep this one going for as long as possible." (Pepper...and Salt, WSJ, 5/4/2011) |
#16
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#17
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![]() I'll take another shot at this.
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#18
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![]() I do not believe I have seen a DRO rejected for anything other than requesting benefits plan counsel has determined not to be assignable to the AP or for requesting shared payment or separate interest treatment before or after retirement elections are made (respectively).
Helen, if a legal advisor, compliance expert, or body of practice has given you additional rationales for rejecting DROs, I’m not going to say you are wrong for relying on this advice. I just haven’t been given that advice and that doesn’t line up with my practical experience. |
#19
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#20
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