Qualified Domestic Relations Orders & PBGC · qualified domestic relations order, or “QDRO.” The model QDROs and accompanying guidance in PBGC’s booklet, Qualified Domestic

QualifiedDomestic RelationsOrders & PBGC

This edition of PBGC’s booklet on domestic relations orders revises the guidance and model formspublished in December 2003. Most of the revisions are the result of PBGC’s operating experience and changesmade to PBGC’s benefit payment rules, including:

l An explanation of the “earliest PBGC retirement date,” which affects when a participant and alternatepayee can start receiving benefit payments (p. 18).

l A description of PBGC’s benefit payment options (pp. 19 and 32).

l A new model QDRO that may be used specifically for child support—the PBGC Model Child SupportShared Payment QDRO (Appendix D)—and a model QDRO that may be used for providing only asurviving spouse benefit—the PBGC Model Treat-as-Spouse QDRO (Appendix E).

l Information on how to obtain certain participant information from PBGC (Appendix H).

This booklet provides general information to attorneys and other pension professionals on submittingdomestic relations orders to the Pension Benefit Guaranty Corporation (PBGC) after PBGC becomes trustee ofa terminated pension plan. It also provides general information on the procedures PBGC follows to determinewhether an order is a qualified domestic relations order (QDRO) for purposes of paying benefits under Title IVof ERISA. Under ERISA §206(d)(3)(G)(ii), each plan must establish reasonable procedures for determiningwhether an order is a QDRO, but plans may differ in the procedures they establish. The procedures describedin this booklet are PBGC’s procedures and may differ from procedures for plans that have not beentrusteed by PBGC.

The information summarizes PBGC’s rules at the time that the booklet was printed. It is not intended togive legal advice or to replace the advice of an attorney. None of this information takes precedence overlegislation, regulations, or specific interpretations or rulings. The model orders and model language areprovided solely to assist individuals in preparing orders for submission to PBGC, and they cover only the mostcommon situations that may need to be addressed in a domestic relations order. PBGC will not condition itsdetermination of whether an order is a QDRO on the use of any particular form or language.

The information does not represent the government’s interpretation of the rules governing QDROs.Interpretation of those rules is within the jurisdiction of the U.S. Department of Labor (DOL) and theInternal Revenue Service (IRS).

This booklet may be obtained from PBGC’s Web site at www.pbgc.gov or by calling PBGC at 1-800-400-PBGC (7242). (TTY/TDD users may call the Federal Relay Service toll-free at 1-800-877-8339 and ask to beconnected to this number.)

For additional information, DOL’s publication QDROs—The Division of Pensions through Qualified DomesticRelations Orders is available at www.dol.gov/ebsa/publications/qdros.html, or by calling the EmployeeBenefits Security Administration Hotline at 1-866-444-EBSA (3272). IRS Notice 97-11 (“Providing SampleLanguage for a Qualified Domestic Relations Order”) was published January 13, 1997, at 1997-2 I.R.B. 49 andappears in its entirety in Appendix C of DOL’s QDRO publication.

REQUIRED PAPERWORK REDUCTION ACT NOTICEUnder ERISA, no part of an individual’s benefit may be assigned to another person involved in a domestic relations

proceeding, such as a separation or divorce, unless PBGC receives a domestic relations order and determines it to be aqualified domestic relations order, or “QDRO.” The model QDROs and accompanying guidance in PBGC’s booklet,Qualified Domestic Relations Orders & PBGC, are intended to assist parties by making it easier to comply with statutoryrequirements. Under the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not requiredto respond to, a collection of information unless it displays a currently valid OMB control number. This collection ofinformation has been approved by the Office of Management and Budget (OMB) under control number 1212-0054(expires 08/31/09). The information provided to PBGC may be disclosable under the Freedom of Information Act andthe Privacy Act.

PBGC estimates that the average burden of preparing a QDRO with the assistance of PBGC’s booklet will be 3/4

hour of the participant’s or alternate payee’s time and $450 to $880 in professional fees if the participant or alternatepayee hires an attorney or other professional to prepare the QDRO, or 10 hours of the participant’s or alternate payee’stime if they prepare the QDRO without hiring an attorney or other professional. Comments concerning the accuracy ofthis estimate or suggestions for further reducing this burden may be sent to Pension Benefit Guaranty Corporation,Legislative and Regulatory Department, 1200 K Street NW, Washington, DC 20005-4026.

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I Qualified Domestic Relations Orders and PBGC 2

II PBGC Model QDROs 4PBGC Model Separate Interest QDRO 5PBGC Model Shared Payment QDRO 9

PBGC Model QDRO Instructions 13Introductory Paragraph 13Section 1. Identification of Plan 13Section 2. Identification of Participant and Alternate Payee 13Section 3. Amount of Benefit to Be Paid to the Alternate Payee 13Section 4. PBGC Benefit Adjustments 17Section 5. Benefits Start 18Section 6. Form of Benefit 19Section 7. Benefits Stop 20Section 8. Death of Participant 21Section 9. Death of Alternate Payee 21Section 10. Surviving Spouse Rights of Alternate Payee 22Section 11. Other Requirements 24Section 12. Reservation of Jurisdiction 24

III Procedures and Checklist 25

Appendix A Defined Benefit Pension Plans and PBGC Benefit Rules 31

Appendix B Domestic Relations Orders Qualified Before PBGC Becomes Trustee 34

Appendix C QDRO Tax Rules 35

Appendix D PBGC Model Child Support Shared Payment QDRO 36

Appendix E PBGC Model Treat-as-Spouse QDRO 41

Appendix F Language for Including a Contingent Alternate Payee 48

Appendix G Language for Including Subsidized Early Retirement Benefits in aSeparate Interest QDRO 50

Appendix H How to Obtain Certain Participant Information from PBGC 51

Glossary 52

Contents

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The Pension Benefit GuarantyCorporation (PBGC) is a federal agencythat insures the benefits of about 44 millionmen and women in more than 30,000private-sector defined benefit pension plans.A defined benefit pension plan that doesnot have enough money to pay benefitsmay be terminated if the employerresponsible for the plan faces severefinancial difficulty, such as bankruptcy, andis unable to maintain the plan. In such anevent, PBGC becomes trustee of the planand pays pension benefits, subject to legallimits, to plan participants and beneficiaries.PBGC’s rules on benefit amounts andbenefit forms payable by PBGC aresummarized in Appendix A and can befound in 29 C.F.R. Parts 4000 et. seq.

The benefits of a pension planparticipant generally may not be assignedor alienated. The law provides an exceptionfor domestic relations orders that relate tochild support, alimony payments, ormarital property rights of an alternate payee(a spouse, former spouse, child, or otherdependent of a plan participant). Theexception applies only if the domesticrelations order meets specific legalrequirements that make it qualified, that is,a qualified domestic relations order, or“QDRO.” See section 206(d) of theEmployee Retirement Income Security Actof 1974, as amended (ERISA), and section414(p) of the Internal Revenue Code of1986, as amended (Code).

I Qualified Domestic Relations Orders And PBGC

PBGC reviews a domestic relations orderthat has been submitted to PBGC and mustdetermine that the order is qualified beforebeing able to pay benefits to an alternatepayee.

PBGC QDRO Requirements

Identity of the plan participant, eachalternate payee, and each pension plan. AQDRO must specify the name and lastknown mailing address of the planparticipant and each alternate payee coveredby the order. A QDRO also must identifythe name of each plan to which the orderapplies—this should be the plan’s formalname.

Amount to be paid and when paymentsstart. A QDRO must state how much ofthe plan participant’s benefit is to be paid tothe alternate payee, such as a dollar amountor percentage of the benefit, or make clearthe manner in which the amount is to bedetermined. A QDRO also must specify orallow the alternate payee to choose whenpayments to the alternate payee will start.

What happens on the death of the planparticipant and the alternate payee. AQDRO should specify whether thealternate payee will be treated as theparticipant’s spouse for purposes of anysurvivor benefits. A QDRO also shouldspecify what happens to benefits when thealternate payee dies.

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What a QDRO Must Not Require

A QDRO must not require PBGC to:

l pay any benefits not permitted underERISA or the Code;

l provide any type or form of benefit, orany option, not otherwise provided byPBGC;

l pay benefits with a value in excess of thevalue of benefits that would otherwise bepayable by PBGC;

l pay benefits to an alternate payee whenthose benefits are required to be paid toanother alternate payee under an orderpreviously determined to be a QDRO;

l pay benefits to the alternate payee forany period before PBGC receives theorder;

l pay benefits as a separate interest to thealternate payee if the participant isalready receiving benefit payments; or

l change the benefit form if the participantis already receiving benefit payments.

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PBGC has developed two modelQDROs for general use after a definedbenefit plan has terminated and PBGC hasbecome trustee of the plan: a PBGC ModelSeparate Interest QDRO and a PBGCModel Shared Payment QDRO. (Twoadditional model QDROs that may be usedspecifically for child support or forproviding only a surviving spouse benefitare located in Appendices D and E,respectively.) A QDRO should be clear asto whether the alternate payee is to receive aseparate portion of the participant’sretirement benefit to be paid at a time andin a form different from that chosen by theparticipant or a portion of the actualbenefit payments made to the participant.PBGC’s Model QDROs make thisdistinction clear.

The PBGC Model Separate InterestQDRO may be used only if theparticipant’s benefit payments have notstarted when the domestic relations orderis submitted to PBGC for qualification.The model is intended to be used when analternate payee wishes to receive pensionbenefits without regard to when theparticipant starts payments and withoutregard to the form of the participant’spayments. The participant’s benefit isdivided into two separate parts—one for theparticipant and one for the alternate payee.The PBGC Model Separate Interest QDROgives the alternate payee control over thetiming and form of his or her benefit

II PBGC Model QDROs

payments. The alternate payee can (1) starthis or her payments before the participant(subject to certain restrictions), (2) receivepension benefits over his or her lifetimerather than the participant’s lifetime,(3) choose a straight life annuity or certain-and-continuous (C&C) annuity that mayprovide benefits to the alternate payee’sbeneficiary for a limited period, and(4) receive surviving spouse benefits withrespect to the participant’s remainingseparate interest.

With the PBGC Model SharedPayment QDRO, the plan participant andthe alternate payee “share” each benefitpayment. The model may be usedregardless of whether the participant hasstarted payments, but the alternate payeecannot start receiving benefits before theparticipant starts receiving benefits. ThePBGC Model Shared Payment QDROmust specify the amount or percentage ofthe participant’s benefit payment that isassigned to the alternate payee and thenumber or duration of payments to thealternate payee. Payments to the alternatepayee stop, at the latest, when theparticipant dies or stops receivingpayments. However, the QDRO may alsoassign the alternate payee a right to survivorbenefits or other benefits under the plan.

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QUALIFIED DOMESTIC RELATIONS ORDER

This Order is intended to be a qualified domestic relationsorder (“QDRO”), as that term is defined in section 206(d) of theEmployee Retirement Income Security Act of 1974, as amended(“ERISA”) and section 414(p) of the Internal Revenue Code of 1986,as amended (“Code”). This Order is granted in accordance with[applicable state domestic relations law citations], which relateto marital property rights, child support, and/or spousal supportbetween spouses or between a spouse and a former spouse inmatrimonial actions. The Participant is not currently receivingbenefit payments from PBGC with respect to the plan identifiedbelow.

SECTION 1. IDENTIFICATION OF PLAN

This Order applies to benefits under the [formal name of plan](“Plan”). The Pension Benefit Guaranty Corporation (“PBGC”) istrustee of the Plan.

SECTION 2. IDENTIFICATION OF PARTICIPANT AND ALTERNATE PAYEE

a. [Name of the Participant] is eligible to receive a benefitfrom the Plan and is hereafter referred to as the “Participant.”

PBGC Model Separate Interest QDRO


IN RE MARRIAGE/SUPPORT OF

__________________PETITIONER,

V.

__________________PARTICIPANT, RESPONDENT.

X::::::::X

CASE NO. ____________

IN THE _____________ COURT OF ______________

DIVISION ______________ COUNTY ______________

(You may use this model when a defined benefit pension plan has terminated, PBGC has becometrustee of the plan, and the parties want PBGC to divide the value of the participant’s benefitbetween the participant and the alternate payee in designated amounts. You may use thismodel only if the participant’s benefit payments have not started when the order issubmitted to PBGC for qualification. Please read instructions for important information.)

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The Participant’s mailing address is [address]. The Participant’sSocial Security Number is [Social Security Number].

b. [Name of the Alternate Payee] is hereafter referred to as the“Alternate Payee.” The Alternate Payee’s mailing address is[address]. The Alternate Payee’s Social Security Number is[Social Security Number]. The Alternate Payee is the[spouse/former spouse/child/other dependent] of the Participant.

SECTION 3. AMOUNT OF BENEFIT TO BE PAID TO ALTERNATE PAYEE

Starting at the time specified in section 5, PBGC shall pay tothe Alternate Payee as a separate interest an amount actuariallyequivalent to [$x per month/x%] of the Participant’s benefit underthe Plan. The Participant’s benefit shall be determined as of[date of separation/date of divorce/date of plan termination/thedate the Alternate Payee elects to begin receiving benefits fromthe plan/some other date]. The Alternate Payee’s separateinterest shall be determined as a benefit payable over thelifetime of the Alternate Payee.

SECTION 4. PBGC BENEFIT ADJUSTMENTS

If PBGC adjusts the Participant’s benefit from the benefitpayable under the plan, any reduction shall be applied bydecreasing [pro rata the value of the Participant’s and theAlternate Payee’s benefits/the value of the Participant’sremaining benefit first/the value of the Alternate Payee’sseparate interest first], and any increase shall be applied byincreasing [pro rata the value of the Participant’s and theAlternate Payee’s benefits/the value of the Participant’sremaining accrued benefit/the value of the Alternate Payee’sseparate interest].

SECTION 5. BENEFITS START

Payments to the Alternate Payee shall be payable as of [suchfuture date as the Alternate Payee elects/a future specifieddate]. (This date must be the first day of a month and cannot bebefore the Participant’s “earliest PBGC retirement date,” which isdefined in 29 C.F.R. §4022.10.) Payment shall not be made untilPBGC qualifies this domestic relations order and receives a PBGCbenefit application from the Alternate Payee.


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SECTION 6. FORM OF BENEFIT

PBGC shall pay the Alternate Payee’s benefit in the form electedby the Alternate Payee on the PBGC benefit application.

SECTION 7. BENEFITS STOP

PBGC shall stop payments of the Alternate Payee’s separateinterest in accordance with the form of benefit elected by theAlternate Payee.

SECTION 8. DEATH OF PARTICIPANT

The Participant’s death shall not affect payments under theAlternate Payee’s separate interest.

SECTION 9. DEATH OF ALTERNATE PAYEE

If the Alternate Payee dies before commencing benefits, theseparate interest shall [revert to the Participant/be forfeited toPBGC/be paid to the Contingent Alternate Payee (see Appendix F forsubstitute model language if a contingent alternate payee isnamed)]. If the Alternate Payee dies after commencing benefits,sseeee Section 7.

SECTION 10. SURVIVING SPOUSE RIGHTS OF ALTERNATE PAYEE

[Note: Section 10 applies only if the Alternate Payee is thespouse or former spouse of the Participant.]

a. PBGC [shall/shall not] treat the Alternate Payee as theParticipant’s spouse for purposes of the Participant’s qualifiedjoint-and-survivor annuity resulting from the benefit in which theParticipant retains a separate interest. If the word “shall” wasselected in the preceding sentence, the qualified joint-and-survivor annuity payable to the Alternate Payee shall be based on[all/specify another portion ($x/x%)] of the benefit in which theParticipant retains a separate interest.

b. PBGC [shall/shall not] treat the Alternate Payee as theParticipant’s spouse for purposes of the Participant’s qualifiedpreretirement survivor annuity resulting from the benefit in whichthe Participant retains a separate interest. If the word “shall”was selected in the preceding sentence, the qualifiedpreretirement survivor annuity payable to the Alternate Payee


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shall be based on [all/specify another portion ($x/x%)] of thebenefit in which the Participant retains a separate interest.

SECTION 11. OTHER REQUIREMENTS

Nothing in this Order shall require PBGC:

a. To pay any benefits not permitted under ERISA or the Code;

b. To provide any type or form of benefit or any option not paidby PBGC with respect to the Plan;

c. To pay benefits to the Participant and Alternate Payee with atotal value that exceeds the value of the benefits the Participant otherwise would receive under Title IV of ERISA;

d. To pay benefits to the Alternate Payee that are required to be paid to another alternate payee under another QDRO that isin effect prior to this Order;

e. To pay benefits to the Alternate Payee for any period before PBGC receives this Order;

f. To pay benefits as a separate interest to the Alternate Payeeif the Participant already is receiving benefit payments; or

g. To change the benefit form if the Participant is already receiving benefit payments.

SECTION 12. RESERVATION OF JURISDICTION

The Court reserves jurisdiction to amend this Order to establish or maintain its status as a QDRO under ERISA and the Code.

IT IS SO ORDERED:

Date:___________ ___________________________

JUDGE


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This Order is intended to be a qualified domestic relationsorder (“QDRO”), as that term is defined in section 206(d) of theEmployee Retirement Income Security Act of 1974, as amended(“ERISA”) and section 414(p) of the Internal Revenue Code of 1986,as amended (“Code”). This Order is granted in accordance with[applicable state domestic relations law citations], which relateto marital property rights, child support, and/or spousal supportbetween spouses or between a spouse and a former spouse inmatrimonial actions.



SECTION 2. IDENTIFICATION OF PARTICIPANT AND ALTERNATE PAYEE

a. [Name of the Participant] is eligible to receive a benefitfrom the Plan and is hereafter referred to as the “Participant.”The Participant’s mailing address is [address]. The Participant’sSocial Security Number is [Social Security Number].

PBGC Model Shared Payment QDRO


(You may use this model when a defined benefit pension plan has terminated, PBGC has becometrustee of the plan, and PBGC is to pay the alternate payee a portion of the participant’s monthlybenefit payments. You may use this model either before or after the participant’s benefitpayments have started; however, benefit payments to the alternate payee cannot startuntil the participant’s benefit payments have started. Please read instructions for importantinformation.)

CASE NO. ____________

IN THE _______________ COURT OF ______________

DIVISION ______________ COUNTY ______________

IN RE MARRIAGE/SUPPORT OF__________________PETITIONER,

V.


X::::::::X

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b.[Name of the Alternate Payee] is hereafter referred to as the“Alternate Payee.” The Alternate Payee’s mailing address is[address]. The Alternate Payee’s Social Security Number is[Social Security Number]. The Alternate Payee is the[spouse/former spouse/child/other dependent] of the Participant.


a. Starting at the time specified in section 5, PBGC shall payto the Alternate Payee [$x/x%] of each of the Participant’smonthly benefit payments.

b. OPTIONAL: When [insert future event] occurs and PBGC isnotified in writing, PBGC shall [increase/decrease] the amountpaid to the Alternate Payee from each of the Participant’s monthlybenefit payments to [$x/x%].


If PBGC adjusts the Participant’s benefit from the benefitpayable under the Plan, any reduction shall be applied bydecreasing [pro rata the Participant’s and the Alternate Payee’sbenefits/the Participant’s benefit first/the Alternate Payee’sbenefit first], and any increase shall be applied by increasing[pro rata the Participant’s and the Alternate Payee’s benefits/theParticipant’s benefit/the Alternate Payee’s benefit].


Payments to the Alternate Payee shall be payable as of [suchfuture date as the Alternate Payee elects/a future specifieddate/the date when PBGC starts payments to the Participant].(This date must be the first day of a month and cannot be beforethe Participant’s “earliest PBGC retirement date,” which isdefined in 29 C.F.R. §4022.10.) Payment shall not be made untilPBGC qualifies this domestic relations order and receives a PBGCbenefit application from the Alternate Payee. Payments to theAlternate Payee shall not start earlier than the date theParticipant starts payments.


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The Alternate Payee shall not have the right to elect a form ofbenefit. The amount paid to the Alternate Payee will bedetermined by the benefit form elected by the Participant.


Except for any survivor benefits described in section 10, PBGCshall make payments to the Alternate Payee until the [earlier ofthe Participant’s or Alternate Payee’s death/earlier of: theParticipant’s or Alternate Payee’s death, a specific date, or thedate PBGC is notified in writing of the occurrence of [insertspecific event]].


Except for any survivor benefits described in section 10, if theParticipant dies before the Alternate Payee, the Alternate Payeeis not entitled to any payments as of the first of the monthfollowing the Participant’s death.


If the Alternate Payee and, if applicable, the ContingentAlternate Payee, dies before the Participant, PBGC shall returnthe Participant’s monthly benefit payments to the amount that theParticipant would be receiving had there been no Order. (SeeAppendix F for substitute model language if a contingent alternatepayee is named.)


[Note: Section 10 applies only if benefit payments to theParticipant have not started and the Alternate Payee is the spouseor former spouse of the Participant.]

a. PBGC [shall/shall not] treat the Alternate Payee as theParticipant’s spouse for purposes of the Participant’s qualifiedjoint-and-survivor annuity. If the word “shall” was selected inthe preceding sentence, the qualified joint-and-survivor annuitypayable to the Alternate Payee shall be based on [all/specifyanother portion ($x/x%)] of the Participant’s benefit.


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b. PBGC [shall/shall not] treat the Alternate Payee as theParticipant’s spouse for purposes of the Participant’s qualifiedpreretirement survivor annuity. If the word “shall” was selectedin the preceding sentence, the qualified preretirement survivorannuity payable to the Alternate Payee shall be based on[all/specify another portion ($x/x%)] of the Participant’sbenefit.





c. To pay benefits to the Participant and Alternate Payee with atotal value in excess of the value of the benefits the Participant otherwise would receive under Title IV of ERISA;

d. To pay benefits to the Alternate Payee that are required to be paid to another alternate payee under another QDRO that isin effect prior to this Order.

e. To pay benefits to the Alternate Payee for any period before PBGC receives this Order; or

f. To change the benefit form if the Participant is already receiving benefit payments.


The Court reserves jurisdiction to amend this Order to establishor maintain its status as a QDRO under ERISA and the Code.

IT IS SO ORDERED:

Date:___________ ___________________________

JUDGE


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Introductory Paragraph

Insert the applicable state domesticrelations law citations.

Section 1. Identification of Plan

Insert the formal name of the plan coveredby this Order (i.e., the full name as stated inplan documents).

Section 2. Identification of Participant and Alternate Payee

(a) Insert the name, mailing address andSocial Security Number of the participant.

(b) Insert the name, mailing address andSocial Security Number of the alternate payee.Specify the relationship (spouse/formerspouse/child/other dependent) of the alternatepayee to the participant.

The Order should be clear on theidentity of the participant and the alternatepayee. If an alternate payee is a minor orlegally incompetent, the Order mustinclude the name and address of theguardian, other legal representative, or state

agency to whom PBGC will send paymentson behalf of the minor or legallyincompetent person (see language in section2.b. of the PBGC Model Child SupportShared Payment QDRO – Appendix D).

Section 3. Amount of Benefit to Be Paid to Alternate Payee

Insert the flat dollar amount or percentageof the participant’s benefit that the alternatepayee is to receive. Also insert the date as ofwhich the benefit is to be determined, ifapplicable.

The Order must specify how much ofthe participant’s benefit the alternate payeewill receive. Because the participant oftendoes not know the specific amount that willbe paid at retirement, this can be difficultfor the Order to address and for PBGC tointerpret. The assistance of an actuary maybe helpful in making these complexdeterminations. Information about theparticipant’s benefit under a plan trusteedby PBGC may be obtained by a prospectivealternate payee (or his or her guardian) by

PBGC Model QDRO Instructions

The following information on completing the PBGC Model Separate Interest QDRO andModel Shared Payment QDRO discusses each provision separately, but all of the provisionswork together. The time that benefit payments start and stop can affect the amount ofbenefits the participant and the alternate payee will receive. Similarly, the form of benefitpayments—whether benefits are paid as a straight life annuity or an annuity with survivorbenefits—can affect the amount of benefits the parties will receive.

The models are drafted assuming one plan and one alternate payee. If the domesticrelations order (Order) is intended to cover more than one PBGC-trusteed plan or more thanone alternate payee, the Order should be clear as to which plan and alternate payee eachprovision is addressing. The preferred way of doing this is to repeat sections 1 through 10 asnecessary for each plan.

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requesting this information from PBGC (seeAppendix H – How to Obtain CertainParticipant Information from PBGC).

PBGC has found there is less confusionwith an Order that states a specificpercentage or amount, and the models aredrafted with that approach. If, instead, theparties choose to include a formula, PBGCwill treat the domestic relations order asqualified only if we can determine thebenefit under the formula based on theinformation in the Order. The Order mustinclude any information that would benecessary to determine the benefit amountand, where applicable, the period duringwhich it is to be paid (for example, a child’sbirth date if the benefit stops when the childattains a certain age).

The PBGC Model Separate Interest QDROprovides that the alternate payee will receivea benefit “actuarially equivalent” in value toa specified portion of the participant’sbenefit. PBGC will determine the amountof the alternate payee’s monthly benefittaking into account the plan’s earlyretirement factors (if applicable) and the agesof the participant and alternate payee at thetime the alternate payee’s benefit paymentsbegin. PBGC’s actuarial factors will be usedto adjust for the difference in ages of theparticipant and alternate payee and the formelected by the alternate payee.

The PBGC Model Shared Payment QDROprovides that the alternate payee will receivea portion of each of the participant’s benefitpayments on or after the date the

participant starts benefit payments. Itallows the alternate payee’s portion toincrease or decrease at a specified time orupon a specified event. The Order mustspecify the amount and timing of anychange.

Neither type of Order can provide forpayments to the alternate payee to bepayable as of a date before PBGC receivesthe domestic relations order, but the SharedPayment QDRO can increase the monthlypayment amount to the alternate payee (anddecrease the monthly payment to theparticipant by the same amount) for aspecified period.

There are many ways an Order canspecify the portion or value of a benefit orpension payment that the alternate payee isto receive under the Order. An Order canspecify a dollar amount or a percentage orprovide a formula for determining theamount or percentage. The dollar amountor percentage can be based on theparticipant’s entire benefit or payment, orjust on the part of the benefit or paymentearned during the marriage or up to aspecified date.

The PBGC Model Separate Interest QDROprovides that the alternate payee is to receivea benefit that is the actuarial equivalent of aspecific portion of the benefit that theparticipant has earned as of a given date,expressed either as a dollar amount or apercentage of the participant’s benefit (forexample, the actuarial equivalent of $1,000per month of the participant’s benefit, or

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the actuarial equivalent of 50% of theparticipant’s monthly benefit). In a SeparateInterest QDRO, the sum of the values of theparticipant’s portion and the alternatepayee’s portion cannot exceed the total valueof the benefit PBGC would have paid theparticipant assuming there was no Order(see Section 4 – PBGC BenefitAdjustments).

The Separate Interest QDRO mustspecify the date as of which the alternatepayee’s portion of the participant’s benefit isto be determined. Typically, for domesticrelations orders issued after PBGC trustees aplan, the division of benefits is based on theparticipant’s benefit as of the date: ofmarital separation, of divorce, the alternatepayee elects to begin receiving benefits fromthe plan, or of plan termination (in planstrusteed by PBGC, all benefit accruals willhave ceased no later than the date the planterminated). The choice of thedetermination date (for example, at the dateof marital separation or divorce) can have asignificant effect on the benefit amountassigned to the alternate payee and thebenefit amount retained by the participant.

Example 1 - Separate Interest QDRO.Carol is the plan participant and is age40; Mark is age 35. Their QDROprovides that Mark will receive a separateinterest that is actuarially equivalent to50% of Carol’s pension benefit. Carol’sbenefit in the form of a straight lifeannuity with payments beginning at her

age 65 is $600 per month. Mark’s 50%interest in Carol’s benefit has a value thatis actuarially equivalent to a life annuityof $300 ($600 x 50%) per month to Carolbeginning at her age 65.

Mark is younger than Carol, so a benefitof $300 per month to Carol at age 65generally will provide a different monthlybenefit for Mark regardless of when hestarts. Mark’s actual monthly lifeannuity payments will depend on hisage when he starts benefit payments,PBGC’s actuarial factors, and the benefitform he elects.

Most pension plans provide for“normal retirement” at age 65 (or, if later,the fifth anniversary of the date theparticipant commenced participationunder the plan). Many plans allow “earlyretirement” at some younger age, often incombination with a specified amount ofservice with the employer—for example, atage 60 with at least 20 years of service.Some plans actuarially reduce the earlyretirement benefit to reflect the longerpayout—for example, if the benefit wouldbe $1,000 per month starting at age 65, itmight be reduced to $650 per monthstarting at age 60.

Other plans may not reduce the benefitat all—for example, paying the same $1,000per month starting at age 60 as theparticipant would receive starting at age 65.This kind of early retirement benefit isreferred to as a “subsidized” early retirement

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benefit, because the participant’s benefit isnot reduced even though it will cost theplan more due to the earlier starting date.(The benefit would be considered “partiallysubsidized” if the benefit were reduced, butnot as much as would be necessary to makeit equal in value to the benefit that wouldbe paid starting at age 65.)

An Order may be written so as toprovide (or not provide) the alternate payeewith all or part of the value of a subsidizedearly retirement benefit. If the participanthas not commenced receiving thesubsidized benefit by the time an alternatepayee has elected to commence benefitsunder a Separate Interest QDRO, thealternate payee cannot receive a portion ofthe subsidized early retirement benefitwhen his or her benefit commences.However, the Order may provide that if andwhen the participant begins receiving asubsidized early retirement benefit aportion of the early retirement subsidy willbe provided to the alternate payee.NOTE: if the Order is silent with respectto whether the alternate payee is to receiveany portion of the subsidized earlyretirement benefit, PBGC will pay theentire subsidy to the participant. (SeeAppendix G.) Under the PBGC ModelShared Payment QDRO, if the alternatepayee receives a percentage share of theparticipant’s benefit, the alternate payee’sbenefit will automatically include a portionof the early retirement subsidy if theparticipant retires early.

The PBGC Model Shared PaymentQDRO provides that a specific amount or apercentage of each of the participant’smonthly benefit payments is paid directlyto the alternate payee (for example, $400 permonth, or 25% of each monthly benefitpayment). The combined benefit paymentsto the participant and the alternate payeeunder a Shared Payment QDRO equal thebenefit that would be paid to theparticipant assuming there was no QDRO.

Example 2 - Shared Payment QDRO.A QDRO provides Dick’s former spouse,Jane, with 25% of each of his monthlypension payments once his paymentsstart. Dick begins receiving his benefitsat age 65, and his monthly payments are$900 per month in the form of a straightlife annuity. Jane’s portion of Dick’spayment will be $225 per month ($900 x25% = $225). Under the QDRO, Janewill receive $225 per month for Dick’slifetime and Dick will receive $675 permonth ($900 - $225).

In calculating the amount or percentageto be given to the alternate payee under aQDRO, the parties frequently will take intoaccount the portion of the participant’sbenefit that was earned during the time thealternate payee and the participant weremarried. Under this method, the alternatepayee’s portion of the participant’s benefit(for example, 50%) would be multiplied bya fraction, the numerator of which is thenumber of years and months that theparticipant earned benefits under the planduring the parties’ marriage, and the

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denominator of which is the total numberof years and months that the participantearned benefits under the plan. Thismethod of allocating the benefit issometimes referred to as the marital portionor marital fraction method, and it can beused for both shared payment and separateinterest QDROs.

Example 3 - Marital Fraction Method(Separate Interest QDRO).Continuing with Example 1, assumeCarol earned benefits under the plan for10 years and was married to Mark for 5of those years. If their QDRO applied themarital fraction method to Mark’s 50%separate interest, Mark’s 50% interestwould be multiplied by the maritalfraction of 5/10. Thus, Mark’s pensionwould be actuarially equivalent to thevalue of a straight life annuity of $150($600 x 50% x 5/10) per month payableto Carol beginning at her age 65. (IfMark and Carol had been married 12years, and Carol had earned benefits for10 of those years, the marriage fractionwould have been 10/10, or 1. Markwould receive a benefit actuariallyequivalent to 50% of Carol’s benefit.)

Section 4. PBGC Benefit Adjustments

Insert the method for allocating anyadjustments PBGC makes in benefits. Becausethe parties may wish to handle benefitincreases and decreases differently, the modelsinclude separate sentences for each.

After trusteeing a plan, PBGC mayreduce benefits as necessary to meet thelimitations established by ERISA (seeAppendix A). PBGC pays estimatedbenefits until it has completed its workon the plan and determined final benefits.In some cases—especially in plans withbenefits that exceed PBGC guaranteelimits or that have complex benefitstructures—final benefit amounts willdiffer from the estimated paymentamounts paid by PBGC.

In general, if a QDRO awards a fixedpercentage of the participant’s benefitpayment to the alternate payee and providesno guidance on apportioning between theparticipant and alternate payee any benefitadjustments made by PBGC, PBGC willadjust their benefits pro rata. If a QDROawards a fixed-dollar amount of theparticipant’s benefit to the alternate payeewith no additional guidance, PBGC willfirst increase or decrease the participant’sbenefit to reflect PBGC’s adjustment.PBGC will not adjust the fixed-dollaramount awarded to the alternate payee foran increase, and will reduce the alternatepayee’s fixed-dollar amount only if the totaldecrease to be made exceeds theparticipant’s benefit.

If PBGC’s estimated payments were toolow, PBGC will pay the difference (plusinterest) in a single payment to theparticipant, alternate payee, or both, asapplicable. If the estimated payments weretoo high, PBGC will actuarially reducemonthly benefit payments (generally by no

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more than 10%) to the participant andalternate payee to recoup any overpaymentgradually. The benefit reduction will endwhen the amount of the overpayment isrecouped.

Section 5. Benefits Start

Indicate the date as of which the alternatepayee’s benefit payments should begin. Themodels allow for benefits to begin as of aspecific future date, or a future date elected bythe alternate payee. The alternate payee’sbenefit start date will depend in part on theparticipant’s “earliest PBGC retirement date”(if the separate interest model is used) andwhether the participant has begun payment atthe time the order is submitted to PBGC forqualification (if the shared payment model isused). The PBGC Model Separate InterestQDRO may not be used if the participantalready is receiving benefit payments. ThePBGC Model Shared Payment QDRO doesnot allow the alternate payee’s payments tobegin until the participant starts receivingpayments.

The PBGC Model Separate InterestQDRO permits the alternate payee tospecify a future date that his or her benefitpayments will start or to choose a startingdate at some later time. The Order can bewritten to allow the alternate payee to beginreceiving payments independently of whenthe participant begins receiving benefits,but payments to the alternate payee maynot begin before the participant’s “earliestPBGC retirement date.” Payments to thealternate payee must begin no later than the

date the participant is required to beginpayments under section 401(a)(9) of theCode (see Appendix C). The alternatepayee’s benefit will be actuarially adjustedto reflect the alternate payee’s age atcommencement and also for form of benefit(see pp. 14 and 19).

The “earliest PBGC retirement date” hasa specific meaning for PBGC purposes andis defined in PBGC regulation 29 C.F.R.§4022.10. Typically, a participant’s age as ofhis or her “earliest PBGC retirement date”(EPRD) will be 55 unless (1) under theplan’s terms, the participant cannot receivea benefit until a later age, or (2) PBGCdetermines under a facts-and-circumstancestest that the participant could retire earlierthan 55. PBGC tells each participant whathis or her EPRD is in a benefitdetermination.

Example 4. Continuing with Example1, the Separate Interest QDRO allowsMark to start his benefit paymentswithout regard to when Carol’s benefitpayments actually start. For example,Mark may want to begin receivingbenefit payments as early as age 50, whichis when Carol would be 55 years old.(Assume Carol’s “earliest PBGCretirement date” is 55. If Carol’s EPRDwere instead 60, Mark couldn’t startreceiving benefits until he was 55.) IfMark and Carol had used a SharedPayment QDRO and Carol did notbegin receiving benefits until age 65(normal retirement age under the plan),Mark would not be able to beginreceiving benefit payments until Caroldid.

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The PBGC Model Shared Payment QDROprovides the alternate payee with a portionof the participant’s benefit payments duringthe period that the participant receivesbenefits. If the participant is alreadyreceiving benefit payments, the alternatepayee under the QDRO may beginreceiving benefits once PBGC qualifies theorder and the alternate payee submits abenefit application. (In general, benefitswould be payable retroactive to the date theoriginal signed order or a certified orauthenticated copy was received by PBGCunless a later date was provided for in theQDRO.) If the participant has not begunreceiving benefit payments, the alternatepayee may not begin receiving paymentsuntil the participant does.

Example 5. Continuing with Example2, PBGC will not begin paying benefitsto Jane under the Shared PaymentQDRO until the time that Dick beginsreceiving his benefit payments.

Section 6. Form of Benefit

Generally, if an Order is issued afterPBGC becomes trustee of a plan, the formsthat PBGC will allow the alternate payee tochoose pursuant to the PBGC ModelSeparate Interest QDRO are a straight-lifeannuity for the life of the alternate payee ora certain-and-continuous (C&C) annuitywith a 5-year, 10-year, or 15-year periodcertain. A straight-life annuity paysbenefits only for the lifetime of thealternate payee; no payments are made afterthe alternate payee dies. A C&C annuity

guarantees payments for the longer of thealternate payee’s life or the period certainthat is selected. If the alternate payee diesbefore the end of the period certain,payments are made to his or her beneficiaryfor the rest of the period certain. If thealternate payee dies after the end of theperiod certain, no further payments aremade. NOTE: Because benefits under aC&C annuity are guaranteed to be paid forat least the period certain, monthlypayments under a C&C annuity will be lessthan they would be if the alternate payeehad selected a straight life annuity.

The alternate payee selects his or herform of benefit when applying to PBGC forbenefits. If the alternate payee selects aC&C annuity, the alternate payee mustdesignate a beneficiary who will receive theremaining payments if the alternate payeedies while receiving payments, but prior tothe end of the period certain. Parties ortheir representatives should contactPBGC before providing for any otherbenefit form in an Order to make certainit is a form that PBGC pays.

Example 6. Continuing with Example1, the Separate Interest QDRO willallow Mark to apply to PBGC to receivebenefits as a straight-life annuity or aC&C annuity. As explained above, theamount of Mark’s monthly benefit isactuarially adjusted to reflect his lifeexpectancy at the date payments begin.In addition, the amount of his monthlybenefit is affected by the benefit form heselects. No matter what benefit form he

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selects, his benefit must have the samevalue as a $300-per-month benefitpayable to Carol over her lifetimebeginning at her age 65. If Mark choosesa straight-life annuity, no furtherpayments will be made after Mark dies.If he chooses to receive a C&C annuity,an annuity that guarantees benefits forthe longer of his life or the period certain,his monthly benefit will be less. If Markchooses a 10-year C&C annuity and diesafter 7 years, his designated beneficiarywill receive 3 years of payments in thesame amount Mark had been receiving.

In the PBGC Model Shared PaymentQDRO, if the participant is receivingbenefit payments, the Order cannot changethe form of benefit payments elected by theparticipant. However, if the participant isnot yet receiving payments, the SharedPayment QDRO (like the Separate InterestQDRO) can provide surviving spousebenefits and thus affect the form of benefitpayment that the participant can elect. Forexample, section 10 of either model QDROcan provide that the participant’s formerspouse, as the alternate payee, will betreated as the participant’s surviving spousebased on all or a portion of theparticipant’s benefit. If the Order soprovides, then for the portion of the benefitfor which the alternate payee is treated asthe spouse, the participant cannot choose aform of benefit other than a qualified joint-and-survivor annuity with the formerspouse as the beneficiary without theformer spouse’s consent at the time the

pension is to begin. If under the SharedPayment QDRO the participant is receivinga C&C annuity and the participant diesduring the certain period, payments to thealternate payee end unless the alternatepayee is the named beneficiary to receivebenefits under the certain period.

Example 7. Continuing with theShared Payment QDRO in Example 2,PBGC will begin paying Jane’s portion ofDick’s benefit no earlier than the timethat Dick begins receiving his benefitpayments. If the QDRO gives Janesurviving spouse rights, Dick must elect aqualified joint-and-survivor annuity withJane as beneficiary, unless Jane consents toDick’s waiver of the qualified joint-and-survivor annuity. If the QDRO does notgive Jane surviving spouse rights, Dickcan elect any form of payment providedto participants by PBGC.

Section 7. Benefits Stop

The time when benefits stop for thealternate payee generally is governed by theform elected in the PBGC benefit application.

Once benefit payments to theparticipant or the alternate payee havestarted, the form of benefit will governwhen benefits stop. Under the PBGCModel Shared Payment QDRO, payments toan alternate payee will stop on the earliestof the (1) death of the participant, (2) thedeath of the alternate payee, or (3) theoccurrence of a specified date or event, suchas the remarriage of the alternate payee or

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the date a child attains a certain age.Parties must notify PBGC’s CustomerContact Center (1-800-400-7242) when anevent occurs that affects the benefit.

Under the PBGC Model Separate InterestQDRO, payments to an alternate payee stopupon the death of the alternate payee. Ifthe alternate payee elected a benefit formunder which a designated beneficiary couldbe paid (for example, a C&C annuity), theform of benefit will govern whether thebeneficiary will be paid and for how long.

Section 8. Death of Participant

Indicate what happens to payments whenthe participant dies.

The PBGC Model Separate InterestQDRO provides that PBGC will pay theseparate interest to the alternate payeeregardless of when the participant dies.(The alternate payee will receive additionalmonthly payment amounts to the extentthe alternate payee is to be treated as thesurviving spouse under section 10.)

The PBGC Model Shared Payment QDROprovides that payment of a benefit, if any,to an alternate payee stops no later than thedeath of the participant (except to theextent that the alternate payee is to betreated as the surviving spouse undersection 10 or the alternate payee is a namedbeneficiary under a C&C annuity).

Example 8. Continuing with the SharedPayment QDRO in Example 2, supposethat Dick retires and begins receiving his

pension benefits as a 10-year certain-and-continuous (C&C) annuity rather than astraight-life annuity. Dick and Jane’schild is the designated beneficiary ofDick’s C&C annuity. Jane receives a25% share of Dick’s benefit payments.Two years after commencing benefitpayments, Dick dies. Dick’s benefitpayments to Jane stop upon Dick’s death.However, payments to their child, thedesignated beneficiary, would thencommence equal to 100% of Dick’sbenefit payment and continue until theend of the 10-year period certain.

Section 9. Death of Alternate Payee

Indicate what happens when the alternatepayee dies.

In the PBGC Model Separate InterestQDRO, if the QDRO is silent on whathappens if the alternate payee dies beforereceiving benefit payments, PBGC willtreat the separate interest as being forfeitedto PBGC. However, the QDRO couldprovide for a contingent alternate payee(such as the participant’s child or otherdependent) to receive a benefit equal invalue to the alternate payee’s separateinterest if the alternate payee dies beforecommencing benefits. (See Appendix F forsubstitute model language if a contingentalternate payee is named.) The QDRO alsocould provide that, if the alternate payee(and any designated contingent alternatepayee) dies before commencing benefits, thevalue of the separate interest returns to theparticipant. The Separate Interest QDROcannot provide for the benefit to go to an

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alternate payee’s (or contingent alternatepayee’s) spouse or estate.

If benefits to the alternate payee havestarted, the form chosen governs—there areno further benefits if the alternate payeechose a straight life annuity, but if thealternate payee elected a C&C annuity anddied before the end of the period certain,the payments for the remainder of theperiod certain will be paid to the alternatepayee’s designated beneficiary.

The PBGC Model Shared Payment QDROaddresses what happens to the alternatepayee’s benefit if the alternate payee diesbefore the participant dies (whether or notbenefit payments have started to thealternate payee). If the alternate payee diesbefore the participant, unless the QDROstates otherwise, the participant’s monthlybenefit payments will be returned to theamount that the participant would bereceiving assuming there was no QDRO.The alternate payee cannot pass paymentson to another beneficiary upon death unlessthe beneficiary is designated in the Order asa Contingent Alternate Payee. However, aswith the Separate Interest QDRO, theShared Payment QDRO could be drafted tocover multiple or contingent alternatepayees, such as payments to theparticipant’s former spouse and then, uponthe former spouse’s death, to theparticipant’s dependent children ascontingent alternate payees. (See AppendixF for substitute model language if acontingent alternate payee is named.)

Example 9. Continuing with theShared Payment QDRO in Example 2,Dick retires and begins receiving hispension benefits as a joint-and-survivorannuity. Jane receives a 25% share ofDick’s benefit payments. Two years aftercommencing benefit payments, Jane dies.Because their QDRO did not name acontingent alternate payee, Jane’s portionof Dick’s benefit payments reverts to Dickat Jane’s death.

Section 10. Surviving Spouse Rights of Alternate Payee

This section applies only if the alternatepayee is the spouse or former spouse of theparticipant. Indicate whether the alternatepayee will be treated as the spouse of theparticipant for purposes of part or all of thequalified preretirement survivor annuityand/or the qualified joint-and-survivorannuity, and, if so, indicate “all” or specify thespouse’s portion. If the alternate payee is toreceive only a qualified preretirementsurvivor annuity and/or qualified joint-and-survivor annuity (that is, the alternate payeewill not receive a separate interest or sharedpayment benefit), see the PBGC Model Treat-As-Spouse QDRO in Appendix E.

In general, if a participant dies beforestarting benefit payments, PBGC pays theparticipant’s surviving spouse a qualifiedpreretirement survivor annuity (QPSA).The surviving spouse can elect to take theQPSA in the form of a straight life annuityor certain-and-continuous annuity. If a

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participant dies after starting benefitpayments in the form of a qualified joint-and-survivor annuity (QJSA), PBGC paysthe participant’s surviving spouse thesurvivor portion of the QJSA.

Under either model QDRO, theparticipant’s former spouse, as the alternatepayee, can be treated as the surviving spouse(even if the participant has remarried) forall or a portion of the pre- or post-retirement survivor benefit of a participantwho has not yet begun to receive payments.Thus, the alternate payee can be designatedas the surviving spouse for all or part of theQPSA and/or the QJSA with respect toeither the participant’s benefit or theportion of the benefit in which theparticipant retains a separate interest.(Where a QJSA applies, the participantcannot elect a form of benefit other than asurvivor annuity with the former spouse asbeneficiary unless the former spouseconsents to a different benefit form at thetime the pension is to begin.) Thesesurvivor benefits can be in addition to aseparate interest or shared payment thealternate payee also has a right to receive.PBGC will pay survivor benefits inaccordance with the terms of the QDROeven if the participant has designated adifferent beneficiary or has remarried, aslong as the domestic relations order wassubmitted before the earlier of the time theparticipant had died or retired.

Example 10. Continuing with theSeparate Interest QDRO in Example 1,Carol dies at age 41. Mark’s separateinterest in Carol’s pension benefit isunaffected by her death, but PBGC willnot pay benefits to him before Carolwould have reached her “earliest PBGCretirement date.” Also, if the QDRO issilent as to survivor benefits, becauseCarol and Mark were not married at thetime of Carol’s death, Mark is not treatedas Carol’s spouse and will not receive aQPSA.

Example 11. Continuing with theShared Payment QDRO in Example 2,assume the QDRO provides that Janewill be treated as Dick’s spouse forpurposes of survivor benefits. When Dickretires, he elects a qualified joint-and-50%-survivor annuity, which reduces hismonthly benefit from $900 to $820.Based on the terms of their SharedPayment QDRO, Jane receives 25% of themonthly benefit payable during Dick’slife, or $205. Three years after startingbenefit payments, Dick dies. Under theterms of their QDRO, Jane’s 25% portionof Dick’s benefit payments stops at Dick’sdeath. However, Jane will receive asurvivor annuity (that is, a monthlybenefit for her lifetime) equal to 50% ofDick’s annuity benefit, or $410.

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In rare cases, a pension plan provides forsurvivor benefits in addition to thoserequired by ERISA (for example, a steelplan’s “Free Surviving Spouse Benefit”). Inorder for part or all of such benefits to bepaid to an alternate payee (rather than tothe person who otherwise would be entitledto receive such death benefits under theplan, for example, a second spouse), theQDRO must specifically provide forpayment of the benefits to the alternatepayee.

Section 11. Other Requirements

The provisions in this section should be inall Orders submitted to PBGC, and theparties’ attorneys or representatives shouldensure that the provisions are met.

Section 12. Reservation of Jurisdiction

Include the necessary language for the courtissuing the domestic relations order to retainjurisdiction over the Order.

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Planning for a QDRO

Plan ahead and allow sufficient time ateach stage of the process. Failure to do somay preclude certain benefit options for thealternate payee. For example, if PBGC doesnot receive an original signed domesticrelations order (or a copy certified orotherwise authenticated under statedomestic relations procedures) until afterthe participant is in pay status, the alternatepayee may not be able to have a separateinterest order or an order providing for asurvivor benefit for the alternate payeeapproved as a QDRO by PBGC.

Submission to PBGC

To submit an original signed order or acertified or authenticated copy to PBGC,send it to the PBGC QDRO Coordinator,P.O. Box 151750, Alexandria, VA 22315-1750. Because PBGC needs an originalsigned order or a certified or authenticatedcopy, the order cannot be submittedelectronically to PBGC.

PBGC Review of Orders and theSuspension of Benefits DuringIts Review

PBGC will review an original signedorder or a certified or authenticated copy todetermine whether the order is qualified,and will inform the interested parties inwriting of its determination. Interested

parties include all parties named in theorder, their attorneys (if identified), and anyrepresentative designated in writing by theparties.

If PBGC determines the order is not aQDRO, PBGC will explain the reason(s)along with its procedures for appealing thedetermination. An appeal, or a request foran extension of time to appeal, must befiled within 45 days after the date ofPBGC’s determination. While PBGC isreviewing the order to determine whetherthe order is qualified, PBGC will suspendpayment to the participant of any amountsthat the domestic relations order would giveto the alternate payee.

If PBGC determines that the order isqualified, PBGC will begin makingpayments (including any suspendedpayments) to the alternate payee under theQDRO after the 45-day period for filing anappeal has elapsed and the alternate payeehas submitted a benefit application. If anappeal is filed, or a suit is filed in court,PBGC will continue to suspend payment ofthe benefits in controversy until the appealor suit is resolved.

If PBGC determines that the order is notqualified, PBGC will lift the suspension andmake any back payments to the participantas soon as the 45-day period for filing anappeal has elapsed. However, the

III Procedures and Checklist

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submitted as an original signed order or acertified or authenticated copy. (Forinstructions on how to submit a draft orderelectronically, contact PBGC’s CustomerContact Center at 1-800-400-7242.)

PBGC will acknowledge receipt of adraft domestic relations order in writing.For a participant who is not yet in paystatus but is eligible to receive benefits andhas applied for benefits, PBGC will delaythe commencement of any benefits for aperiod of up to 60 days from the date thatPBGC notifies the parties of the results ofits informal review. For a participant whois in pay status, PBGC will suspendpayment to the participant of any amountsthat PBGC determines the draft domesticrelations order would give to the alternatepayee for a period of up to 60 days from thedate that PBGC notifies the parties of theresults of its informal review.

If an original signed order or a certifiedor authenticated copy is received by PBGCwithin the 60-day period, PBGC willreview the order and continue to suspendbenefits in accordance with the proceduresdescribed in “PBGC Review of Orders andthe Suspension of Benefits During ItsReview,” which appears earlier in thissection. If an original signed order or a

suspension of payments will continue if,within 45 days of PBGC’s determination:(1) an appeal is filed or (2) either partynotifies PBGC in writing that they aremaking the necessary changes in thedomestic relations order and they submit arevised original signed order or a certifiedor authenticated copy within 60 days ofnotifying PBGC. If an appeal is filed andPBGC determines on appeal that the orderis not qualified, PBGC will grant bothparties 60 days to submit a revised originalsigned order or a certified or authenticatedcopy. If the participant or alternate payeeprovides a copy of a court scheduling order,or a written statement by the participant oralternate payee (or the participant’s oralternate payee’s attorney or representative),to the effect that the court will not reviewthe proposed domestic relations order untilafter the 60-day period has ended, PBGCwill grant an extension of the 60-day periodbased on the facts and circumstances.

In no case will PBGC suspendpayments for more than 18 months fromthe date the first payment to the alternatepayee would have been due under the order.PBGC will pay suspended benefits withinterest.

Draft Domestic Relations Orders

At the request of a participant or analternate payee (or an attorney or arepresentative of either), PBGC willinformally review a domestic relationsorder in draft form to determine if it wouldsatisfy qualification requirements if

To submit a domestic relations order toPBGC (or a draft order for a preliminary,informal review), send it to the PBGCQDRO Coordinator, P.O. Box 151750,Alexandria, VA 22315-1750.

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certified or authenticated copy is notreceived by PBGC within the 60-dayperiod, PBGC will put the participant inpay status (in the case of a participant whois not yet in pay status) or release to theparticipant any amounts withheld (in thecase of a participant who is in pay status),unless by the end of the 60-day periodPBGC receives a copy of a court schedulingorder, or a written statement by theparticipant or alternate payee (or theparticipant’s or alternate payee’s attorney orrepresentative), to the effect that the courtwill not review the proposed domesticrelations order until after the 60-day periodhas ended. In that case, PBGC will grant anextension of the 60-day period based on thefacts and circumstances.

If PBGC puts the participant in paystatus, the alternate payee will not be ableto have a separate interest order or an orderproviding for a survivor benefit for thealternate payee approved as a QDRO byPBGC.

Multiple Final Orders

After PBGC has qualified an order, asecond order sometimes will be submittedattempting to modify the first order. Whenthis occurs, PBGC will suspend benefitpayments that would be affected by the neworder. If PBGC qualifies the second order,changes in benefit payments will be madeprospectively only from the date ofsubmission of the second order. If PBGC

does not qualify the second order, see“PBGC Review of Orders and theSuspension of Benefits During Its Review,”above, for appeal rights and/or resubmittinga revised order to PBGC. PBGC will notapply retroactively the terms of a domesticrelations order.

Change of Address or EntitlementStatus

PBGC should be notified promptly ofany change in address. The parties alsoshould notify PBGC immediately if an eventoccurs that affects benefits PBGC is payingor will pay. For example, if payments to thealternate payee would end on a future event,such as remarriage or a child’s reaching acertain age, the parties should immediatelynotify PBGC in writing when the eventoccurs. To notify PBGC about a change inaddress or of an event that affects benefits,contact PBGC’s Customer Contact Centerat 1-800-400-7242.

Checklist

PBGC suggests using the followingchecklist when drafting a domestic relationsorder that will be sent to PBGC:

3 Does the order clearly specify thePBGC-trusteed pension plan to whichit applies?

o Does the order clearly identify thedefined benefit pension plan (forexample, formal plan name)?

o Is the plan trusteed by PBGC?

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o Does the order clearly specify (orallow a future election that wouldspecify) when payments will startfor each alternate payee?

o Does the order clearly requirepayment to the alternate payee fromPBGC (rather than, for example, tothe participant for payment to thealternate payee)?

3 Does the order specify what happenswhen the participant dies?

o Does the order specify that sharedpayments to the alternate payee stopno later than the participant’s death(or never start if the participant diesbefore entering pay status)?

o Does the order specify thatpayments continue to be made tothe alternate payee regardless of theparticipant’s death in the case of aseparate interest QDRO?

o Does the order specify whether theparticipant’s former spouse, as thealternate payee, is to be treated as theparticipant’s spouse (regardless ofwhether the participant remarries)for all or part of the participant’sremaining separate interest (in thecase of a separate interest QDRO) orall or part of the participant’smonthly benefit (in the case of ashared payment QDRO) forpurposes of the qualifiedpreretirement survivor annuityand/or the qualified joint-and-survivor annuity?

3 Does the order include the names ofthe persons to whom it applies?

o Does the order clearly identify theparticipant by providing full name,last known mailing address, andSocial Security Number?

o Does the order clearly identify eachalternate payee (and, if applicable,each contingent alternate payee) byproviding full name, last knownmailing address, and Social SecurityNumber?

o Does the order clearly identify eachalternate payee (and, if applicable,contingent alternate payee) as aspouse, former spouse, child, orother dependent of the participant?

o Does the order provide the nameand address of the guardian, legalrepresentative, or state agency towhom PBGC will send payments onbehalf of an alternate payee (and, ifapplicable, a contingent alternatepayee) who is a minor or legallyincompetent?

3 Does the order specify the amount tobe paid to each alternate payee and thelength of time such payments will bemade?

o Does the order clearly specify theamount or percentage (or state howto determine the amount orpercentage) of the participant’smonthly benefit payment to be paidto each alternate payee?

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3 Does the order specify what happenswhen the alternate payee dies?

o Does the order clearly specify whathappens to the alternate payee’sseparate interest, if any, when thealternate payee dies beforecommencing benefits?

o Does the order clearly specify whathappens to the participant’s benefitwhen the alternate payee predeceasesthe participant in the case of ashared payment QDRO?

3 Was the order issued under a State’sdomestic relations law?

o Is the order a judgment, decree, ororder (including the approval of aproperty settlement agreement)issued pursuant to a State’s domesticrelations law (including acommunity property law)?

o Was the order an order issued by astate unit, typically a court, withauthority to issue such judgments,decrees, or orders under a State’sdomestic relations law?

o Does the order relate to theprovision of child support, alimonypayments, or marital property rightsto a spouse, former spouse, child, orother dependent of a participant?

3 Does the order comply with otherrequirements?

o Is it clear that the order does notrequire PBGC to pay benefits thathave a value in excess of the value of

benefits to which the participantwould otherwise be entitled fromPBGC?

o Is it clear that the order does notrequire PBGC to pay any type orform of benefit, or provide anyoption, that PBGC does nototherwise pay or provide toparticipants and alternate payeeswith respect to the plan?

o Is it clear that the order does notrequire PBGC to pay benefits to analternate payee that are required tobe paid to another alternate payeeunder a previous QDRO?

o Is it clear that the order does notrequire PBGC to pay benefits to analternate payee in an amount orform that is not permitted underERISA or the Code?

o Is it clear that the order does notrequire PBGC to pay benefits to thealternate payee for any period beforePBGC receives the order?

o Is it clear that the order does notrequire PBGC to pay benefits as aseparate interest to the alternatepayee if the participant already isreceiving benefit payments?

o Is it clear that the order does notrequire PBGC to change the benefitform if the participant already isreceiving benefit payments?

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Defined Benefit Pension Plans

There are two basic types of pensionplans: defined benefit plans and definedcontribution plans. PBGC insures benefitsin most private-sector defined benefit plans.PBGC does not insure benefits in definedcontribution plans, such as 401(k) plans.

A defined benefit plan promises eachparticipant a specified benefit at retirement.The benefit usually is based on a formulasuch as the number of years a participanthas worked for a company and/or theparticipant’s average salary for the last fewyears of work or over the participant’scareer.

Defined benefit plans may payretirement benefits in a variety of ways.The most common form of benefitpayment is an annuity. Normally, annuitypayments are paid over the participant’s life,over the lives of the participant and abeneficiary, or over the longer of theparticipant’s life or a specified period.

A participant will automatically receivehis or her benefit in the form of an annuityunless the participant chooses (with spousalconsent, if married) a different form ofpayment. An unmarried participantusually will receive an annuity for his orher life. A married participant usually willreceive a qualified joint-and-survivorannuity (QJSA), unless the participant haswaived it with spousal consent.

If a married participant dies afterstarting to receive retirement benefits, theparticipant’s spouse will receive thesurvivor portion of the QJSA, unless theparticipant had waived the QJSA withspousal consent. If the QJSA is not waivedwith spousal consent, the person who wasthe participant’s spouse at retirement willreceive the survivor portion of the QJSAwhen the participant dies even if the partiesare divorced at the participant’s death. If amarried participant dies before starting toreceive retirement benefits, the participant’sspouse will receive a qualified preretirementsurvivor annuity (QPSA), unless theparticipant had waived the QPSA withspousal consent.

A plan may provide that it willdistribute a participant’s benefitimmediately as a lump sum without theparticipant’s election (or the participant’sspouse’s consent) if the value of the lumpsum is $5,000 or less.

Many defined benefit plans offerparticipants a choice of times at which theymay retire—early, normal, or lateretirement. The date a participant choosesto retire and start payments usually willaffect the monthly amount of pensionbenefits the participant receives. In mostplans, the longer a participant waits to startreceiving benefits, the larger the monthlybenefit payments will be.

Appendix A — Defined Benefit Pension Plans and PBGC Benefit Rules

32

PBGC Benefit Rules

PBGC guarantees most, but not all,pension benefits in plans that it insures.PBGC does not guarantee nonpensionbenefits, such as most death benefits (butPBGC does pay the plan’s QPSA benefiteven if QPSA coverage previously waswaived). PBGC does not guarantee benefitsover a certain amount. For example, forsingle-employer pension plans terminatingin 2006, the maximum amount that PBGCguarantees is $3,971.59 per month($47,659.08 per year) for a participant whostarts receiving benefits at age 65 with astraight life annuity. The maximumamount is reduced if benefits will be paid ina form other than a straight life annuity.This maximum amount also is reduced for aretiree who is younger than age 65 whenthe plan terminates and for participants andbeneficiaries who begin receiving benefitpayments after the plan terminates butbefore reaching age 65. (However, themaximum guaranteed amount generally isnot reduced on account of the age of aparticipant where the participant retiredearly (or could have retired early) under theplan due to a disability that is determinedby the Social Security Administration tomeet its definition of disability.) PBGC’sguarantee may be limited for supplementalbenefits and benefit increases resulting fromplan amendments within five years beforethe plan terminates. PBGC may pay morethan the guaranteed amounts if the plan hasenough assets or as a result of PBGC’srecoveries from employers.

For participants who have startedreceiving benefit payments or have properlychosen benefit forms before their plans aretrusteed, PBGC generally will pay benefitsin the forms chosen. For participants whohave not started to receive benefits or havenot chosen benefit forms at the time theirplans are trusteed, PBGC will pay benefitsin the form that participants elect. Theelection choices are the plan’s automaticforms—generally a straight life annuity foran unmarried participant (or a marriedparticipant who has obtained spousalconsent) and a QJSA for a marriedparticipant—and the optional formsprovided under PBGC regulations (see 29C.F.R. §4022.8(c)). The optional formsprovided currently by PBGC for anunmarried participant or a marriedparticipant who has obtained spousalconsent are a: (1) straight life annuity,(2) five-year certain-and-continuous annuity,(3) ten-year certain-and-continuous annuity,(4) fifteen-year certain-and-continuousannuity, (5) joint-and-50%, -75%, or -100%survivor annuity, and (6) joint-and-50%-survivor “pop-up” annuity.

The annuity benefit form available to analternate payee who is not yet in pay statusdepends on the type of QDRO. With aseparate interest QDRO, an alternate payeemay choose from among optional annuitybenefit forms (1) through (4) offered byPBGC, regardless of what benefit form theparticipant chooses. With a sharedpayment QDRO, the alternate payee willreceive a portion of each payment that is

33

being paid to the participant in an amountdesignated by the QDRO; the alternatepayee does not choose the annuity benefitform.

Under both types of QDROs, if benefitpayments to the participant have notstarted, the QDRO may provide that thealternate payee will be treated as theparticipant’s spouse for all or part of theQPSA and/or the QJSA with respect toeither the participant’s benefit (in the caseof a shared payment QDRO) or the portionof the benefit in which the participantretains a separate interest (in the case of aseparate interest QDRO). In such case, thealternate payee would have the right toconsent to a waiver by the participant ofthe QJSA; the alternate payee would receivea QPSA if the participant died beforestarting payments.

PBGC will provide specific informationabout the choices of annuity benefit formsat the time a participant or alternate payeeapplies for benefits. With regard to aseparate interest, PBGC will pay a lumpsum if the value of the benefit (determinedseparately for the participant and alternatepayee) is $5,000 or less at plan termination.

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While this booklet deals with domesticrelations orders issued after PBGC becomestrustee of a plan, PBGC receives andadministers domestic relations orders in twoother situations: (1) where PBGC becomestrustee of a plan that is already payingbenefits pursuant to a QDRO and (2) wherePBGC becomes trustee of a plan where theplan administrator already has approved aQDRO but payments under the QDROhave not started yet.

When PBGC becomes trustee of a planunder which the plan administrator alreadyhas approved orders as QDROs, PBGCreviews the QDROs to see if there isanything in the QDROs that would calltheir qualification into question underPBGC’s rules. If any issues arise, PBGCcommunicates with the parties to theQDRO.

Because PBGC guarantees may not covera participant’s full pension benefit, aparticipant’s benefit may be reduced afterPBGC takes over a plan. This can reducebenefits payable to one or both partiesunder the QDRO. PBGC will not treat theorder as not qualified solely becausebenefits paid by PBGC require reduction ofthe participant’s and/or the alternatepayee’s benefit. PBGC will apply thereduction rules to domestic relations ordersqualified before PBGC becomes trustee(assuming the QDRO is silent) in the samemanner as it applies the reduction rules toorders that are qualified after PBGC

becomes trustee. For example, if a QDROawarded a fixed percentage of theparticipant’s benefit to the alternate payee,the benefits payable to both the participantand the alternate payee would be reduced toreflect PBGC’s guarantee limitations. Onthe other hand, if a QDRO awarded a fixeddollar amount of the participant’s benefit tothe alternate payee, the participant’s benefitwould be reduced first to reflect PBGC’sguarantee limitations. The fixed dollaramount awarded to the alternate payeewould be reduced only if the total decreaseto be made exceeded the participant’sbenefit. If the participant or alternate payeedesires that the guarantee limitation beapplied differently, an amended orderindicating how any reduction should beaddressed would need to be submitted toPBGC for review.

PBGC guarantee limitations apply todomestic relations orders qualified before orafter PBGC becomes trustee. In addition,PBGC benefit form limitations, optionsand benefit start date provisions apply tothe alternate payee’s benefit payments orelections under pre-trusteeship domesticrelations orders if the alternate payee’sbenefit form election is made after PBGCtrusteeship.

Appendix B — Domestic Relations Orders Qualified Before PBGC Becomes Trustee

35

Pension benefits are taxable when theyare paid to the participant or, in some cases,to the alternate payee. Internal RevenueService Publication 575, Pension andAnnuity Income, explains these rules. Alocal IRS office will be able to provide thispublication, or it may be obtained from theIRS’s Web site at www.irs.gov or by calling1-800-TAX FORM.

Benefit payments are taxable to the planparticipant, except for payments madeunder a QDRO directly to an alternatepayee who is a spouse or former spouse (thespouse or former spouse is taxed underthese circumstances). This means, forexample, that the participant is taxed onpayments made under a QDRO to his orher children as alternate payees during thelifetime of the participant.

In some cases participants have madetheir own contributions to their plan.When pension benefits are paid, a portionof each benefit payment is a return of someof these contributions. Because thesecontributions were already taxed beforethey were contributed to the plan, they willnot be taxed again when they are paid outfrom the plan. The tax law provides

detailed rules for determining what portionof each payment is a tax-free return of theparticipant’s contributions.

There is generally an additional 10percent tax on non-annuity payments thatare made before age 59 1/2. However, this10 percent tax does not apply to paymentsmade to an alternate payee under a QDRO.There are special rules regarding rollovers ofamounts paid to alternate payees.

Section 401(a)(9) of the Code specifiesthe date by which distributions must start.Question and Answer 6 of the Treasuryregulation §1.401(a)(9)-8 addresses how therequired minimum distribution rules ofsection 401(a)(9) of the Code apply to theseparate interest of an alternate payee.Payments to the alternate payee must beginno later than the date the participant isrequired to begin payments under section401(a)(9) of the Code. The regulation limitsthe period over which benefits may be paidwith respect to the alternate payee’s separateinterest, thereby limiting what survivorbenefits may be paid, including the lengthof the period certain in a certain-and-continuous annuity.

Appendix C — QDRO Tax Rules

The following information is not intended to be tax advice. Any questions on taxmatters should be directed to a tax advisor or the IRS.

36PBGC Model Child Support Shared Payment QDRO





Appendix D — PBGC Model Child Support Shared Payment QDRO

(You may use this model when a defined benefit pension plan has terminated, PBGC has become trustee ofthe plan, and PBGC is to pay a portion of the participant’s monthly benefit payments as child support. Ifthe participant’s benefit payments have not started, you may submit a shared payment or aseparate interest child support order to PBGC. After a participant’s benefits have started, only ashared payment order may be submitted. Only a shared payment order model is shown because, inPBGC’s experience, it is more commonly used. NOTE: Child support payments under a shared payment order cannot start until the participant’sbenefit payments have started. Please read instructions for important information.)

IN RE MARRIAGE/SUPPORT OF

__________________PETITIONER,

V.


X::::::::X

CASE NO. ____________

IN THE _____________ COURT OF ______________

DIVISION ______________ COUNTY ______________


SECTION 2. IDENTIFICATION OF PARTICIPANT AND ALTERNATE PAYEE(S)


b. [Name of the Alternate Payee] is hereafter referred to as the“Alternate Payee.” The Alternate Payee’s mailing address is[address]. The Alternate Payee’s Social Security Number is[Social Security Number]. The Alternate Payee is the child orother dependent of the Participant.

[If the alternate payee has a guardian, add:]

The Alternate Payee’s legal guardian is [name of guardian],whose mailing address is [address].

[If the payments are required to be sent to a state agency, add:]

Payments under this Order are to be mailed to [name of agencyand its full mailing address]. Questions concerning thesepayments should be addressed to [specify contact at the stateagency] at [telephone number].


a. Starting at the time specified in section 5, PBGC shall payto the Alternate Payee [$x/x%] of each of the Participant’smonthly benefit payments.

b. OPTIONAL: When [insert future event] occurs and PBGC isnotified in writing, PBGC shall [increase/decrease] the amountpaid to the Alternate Payee from each of the Participant’s monthlybenefit payments to [$x/x%].


If PBGC adjusts the Participant’s benefit, any reduction shallbe applied by decreasing [pro rata the Participant’s and theAlternate Payee’s benefits/the Participant’s benefit first/theAlternate Payee’s benefit first], and any increase shall be


applied by increasing [pro rata the Participant’s and theAlternate Payee’s benefits/the Participant’s benefit/the AlternatePayee’s benefit].


Payments to the Alternate Payee shall be payable as of [suchfuture date as the Alternate Payee elects/a future specifieddate/the date when PBGC starts payments to the Participant].(This date must be the first day of a month and cannot be beforethe Participant’s “earliest PBGC retirement date,” which isdefined in 29 C.F.R. §4022.10.) Payment shall not be made untilPBGC qualifies this domestic relations order and receives a PBGCbenefit application from the Alternate Payee. Payments to theAlternate Payee shall not start earlier than the date theParticipant starts payments.


The Alternate Payee shall not have the right to elect a form ofbenefit. The amount paid to the Alternate Payee will bedetermined by the benefit form elected by the Participant.


PBGC shall make payments to the Alternate Payee until the[earlier of the Participant’s or Alternate Payee’s death/earlierof: the Participant’s or Alternate Payee’s death, a specific date,or the date PBGC is notified of the occurrence of [insert specificevent]].


If the Participant dies before the Alternate Payee, theAlternate Payee is not entitled to any payments as of the first ofthe month following the Participant’s death.


If the Alternate Payee dies before the Participant, PBGC shallreturn the Participant’s monthly benefit payments to the amountthat the Participant would be receiving had there been no Order.












IT IS SO ORDERED:

Date:___________ ___________________________

JUDGE

40

PBGC Model Child Support QDRO Instructions

This model is a simplified shared payment QDRO that is designed to provide childsupport only. As this PBGC model is a shared payment QDRO, payments to the alternatepayee cannot start until the participant’s benefit payments have started. The participant’sbenefit payments cannot start earlier than the participant’s “earliest PBGC retirement date”(defined in PBGC regulation 29 C.F.R. §4022.10).

Section 10 of the PBGC Model Shared Payment QDRO, which addresses treating thealternate payee as the participant’s spouse for surviving spouse benefits, has been omittedbecause only spouses and former spouses qualify for those benefits. See the instructionsbeginning on page 13 for information on all other aspects of this model. If more than onechild or other dependent is to be covered by this order, list each child or dependent (andguardian, if applicable) in section 2.b., and specify the amount of the benefit to be paid toeach child or dependent in section 3.

41PBGC Model Treat-As-Spouse QDRO

Appendix E — PBGC Model Treat-As-Spouse QDRO





(You may use this model when a defined benefit pension plan has terminated, PBGC has become trustee ofthe plan, and PBGC is to treat a spouse or former spouse as the participant’s spouse for purposes of aQualified Preretirement Survivor Annuity or a Qualified Joint-and-Survivor Annuity, or both. Do not use thismodel if the alternate payee will receive part of the participant’s benefit as a shared payment orseparate interest (these models already contain survivor benefit options). This model should beused if the Order’s sole intent is to establish an alternate payee’s right to a QualifiedPreretirement Survivor Annuity, a Qualified Joint-and-Survivor Annuity, or both. You may use thismodel only if it is submitted to PBGC for qualification before the participant’s benefit paymentshave started. Please read instructions for important information.)

CASE NO. ____________

IN THE _______________ COURT OF ______________

DIVISION ______________ COUNTY ______________

IN RE MARRIAGE/SUPPORT OF__________________PETITIONER,

V.


X::::::::X


SECTION 2. IDENTIFICATION OF PARTICIPANT AND ALTERNATE PAYEE(S)


b. [Name of the Alternate Payee] is hereafter referred to as the“Alternate Payee.” The Alternate Payee’s mailing address is[address]. The Alternate Payee’s Social Security Number is[Social Security Number]. The Alternate Payee is the[spouse/former spouse] of the Participant.


[Include either a., b., or both, as appropriate.]

a. PBGC shall treat the Alternate Payee as the Participant’sspouse for purposes of the Participant’s qualified joint-and-survivor annuity. The survivor annuity payable to the AlternatePayee shall be based on [all/specify another portion ($x/x%)] ofthe Participant’s benefit.

b. PBGC shall treat the Alternate Payee as the Participant’sspouse for purposes of the Participant’s qualified preretirementsurvivor annuity. The survivor annuity payable to the AlternatePayee shall be based on [all/specify another portion ($x/x%)] ofthe Participant’s benefit.


The amount of benefit paid to the Alternate Payee shall be basedon the surviving spouse benefits provided to the Alternate Payeeunder sections 3 and 7.


If PBGC adjusts the Participant’s benefit from the benefitpayable under the Plan, the Alternate Payee’s survivor annuityshall be based on the Participant’s adjusted benefit.



PBGC shall start payments to the Alternate Payee after the deathof the Participant. In the case of a qualified joint-and-survivorannuity, the Alternate Payee’s benefit shall start on the first ofthe month following the month in which the Participant dies. Inthe case of a qualified preretirement survivor annuity, theAlternate Payee’s benefit shall start not earlier than the firstof the month following: the Participant’s death or, if later, theParticipant’s “earliest PBGC retirement date,” which is defined in29 C.F.R. §4022.10. The Alternate Payee may defer commencement ofthe qualified preretirement survivor annuity to a date not laterthan the date specified by Section 401(a)(9) of the InternalRevenue Code. Payment shall not be made until the Alternate Payeesubmits a PBGC benefit application to PBGC.


a. If the Alternate Payee is treated as the Participant’s spousefor purposes of the Participant’s qualified joint-and-survivorannuity under Section 3.a., above, and the Participant dies whilereceiving payments, PBGC shall pay to the Alternate Payee astraight-life annuity for the Alternate Payee’s life unless theAlternate Payee consented in writing to the Participant’s waiverof the qualified joint-and-survivor annuity at the Participant’sretirement.

b. If the Alternate Payee is treated as the Participant’s spousefor purposes of the Participant’s qualified preretirement survivorannuity under Section 3.b., above, and the Participant dies priorto receiving benefit payments, the Alternate Payee may elect astraight-life annuity or a certain-and-continuous annuity formoffered by PBGC.


PBGC shall make payments to the Alternate Payee until the deathof the Alternate Payee. If the Alternate Payee elects a certain-and-continuous annuity in the PBGC benefit application for aqualified preretirement survivor annuity, and the Alternate Payeedies before the end of the period certain, any remaining paymentsshall be made to the Alternate Payee’s designated beneficiary.



[Include either a., b., or both, as appropriate.]

a. If the Participant dies before the Alternate Payee and beforethe Participant’s benefit payments have started, the AlternatePayee shall be eligible for a qualified preretirement survivorannuity whose annuity starting date shall be determined inaccordance with section 6.

b. If the Participant dies before the Alternate Payee, but afterthe Participant’s benefit payments have started, the AlternatePayee is eligible to begin receiving survivor benefit payments inaccordance with the form of the Participant’s benefit and section3.


Under this Order, no benefit will be paid with respect to anAlternate Payee who dies before the Participant. If theParticipant’s benefit is being paid at the Alternate Payee’sdeath, the Participant’s benefit will continue to be paid in theform in which it is being paid.












IT IS SO ORDERED:

Date:___________ ___________________________

JUDGE

46

Section 1. Identification ofPlan—see instructionsfor section 1 of ModelQDRO Instructions.

Section 2. Identification ofParticipant and AlternatePayee(s)—seeinstructions for section 2of Model QDROInstructions.

Section 3. Surviving Spouse Rightsof Alternate Payee—seeinstructions for section10 of Model QDROInstructions.

Section 4. Amount of Benefit toBe Paid to AlternatePayee.

Because the alternate payee will receive asurvivor annuity upon the death of theparticipant, this section refers to sections 3and 7, which describe the survivor annuity.

Section 5. PBGC Benefit Adjustments

Under this model order, the alternate payeewill receive a survivor annuity upon the deathof the participant. The survivor annuity isbased on the amount of the participant’sbenefit, and this section states that thealternate payee’s benefit will be adjusted ifPBGC adjusts the participant’s benefit.

Section 6. Benefits Start

The date on which the alternate payee’sbenefit payments will begin depends onwhether the benefit is a QJSA or a QPSA.A QJSA may start only on the first of themonth following the month of theparticipant’s death. In the case of a QPSA,the benefit may start only after theparticipant’s death. However, the QPSAmay not be paid before the date theparticipant would have first been entitled tobegin receiving a benefit. The alternatepayee may defer receipt of the benefit. Ineither case, an application must besubmitted by the alternate payee before

PBGC Model Treat-as-Spouse QDRO Instructions

The instructions for the PBGC Model Shared Payment and Separate Interest QDROs aregenerally applicable to the PBGC Model Treat-as-Spouse QDRO. See pages 13-24 for thoseinstructions. Below are instructions for items unique to this model.

Do not use this model if the alternate payee will receive part of the participant’sbenefit as a shared payment or separate interest. This model should be used if the solepurpose of the Order is to treat the alternate payee as the participant’s spouse for a qualifiedpreretirement survivor annuity (QPSA), a qualified joint-and-survivor annuity (QJSA), orboth. To also provide an alternate payee with part of the participant’s benefit, use the PBGCModel Separate Interest QDRO or the PBGC Model Shared Payment QDRO instead of thismodel.

47

PBGC will start making benefit payments.

Section 7. Form of Benefit

Under the QJSA, the form of benefit is asurvivor annuity paid as a straight lifeannuity for the alternate payee’s life.However, an alternate payee who is entitledto a survivor annuity under a QPSA mayelect from PBGC a straight life annuity(which ends on the alternate payee’s death)or a certain-and-continuous annuity (whichcontinues until the later of the alternatepayee’s death or the end of the periodcertain) when applying for the benefit. Analternate payee who is entitled to a QJSAmay consent, in writing on a notarizedform, to an election by the participant of aPBGC optional form (straight-life, certain-and-continuous, or joint-life) when theparticipant retires.

Section 8. Benefits Stop

The time when benefits stop for thealternate payee generally is governed by theform elected in the PBGC benefitapplication.

Section 9. Death of Participant

In a treat-as-spouse QDRO, the death ofthe participant makes the alternate payeeeligible for a survivor annuity (either theQPSA or the QJSA, depending on whenthe participant dies).

Section 10. Death of Alternate Payee

In a treat-as-spouse QDRO, the death ofthe alternate payee before the participant

effectively ends the alternate payee’sentitlement to any portion of theparticipant’s survivor benefit.

Section 11. Other Requirements—seeinstructions for section11 of Model QDROInstructions.

Section 12. Reservation ofJurisdiction—seeinstructions for section12 of Model QDROInstructions.

48


a. Death Before Commencing Benefits

(i) If the Alternate Payee dies before commencing benefits, theContingent Alternate Payee named in subsection c, below, shall bepaid an amount actuarially equivalent to the value of theAlternate Payee’s benefit determined under section 3. In suchcase, all references in this Order to the Alternate Payee shallapply to the Contingent Alternate Payee, except as otherwiseindicated (for example, survivor benefits may only be paid to thespouse or former spouse). Payments cannot start before theparticipant’s “earliest PBGC retirement date,” which is defined in29 C.F.R. §4022.10. PBGC shall pay the Contingent AlternatePayee’s benefit in the form elected by the Contingent AlternatePayee on the PBGC benefit application.

(ii) If the Alternate Payee and the Contingent Alternate Payeedie before commencing benefits, the separate interest shall[revert to the Participant/be forfeited to PBGC].

b. Death After Commencing Benefits

If the Alternate Payee or, if applicable, the ContingentAlternate Payee named in subsection c, below, dies aftercommencing benefits, any remaining fixed payments under a certain-and-continuous annuity shall be paid to the beneficiary designatedon the PBGC benefit application. If the Alternate Payee or, ifapplicable, the Contingent Alternate Payee, was receiving astraight life annuity at death, no further benefits will bepayable.

Appendix F — Language for Including a Contingent Alternate Payee

(Note: If a contingent alternate payee is designated, the alternate payee’s separate interest benefit may beactuarially adjusted downward to reflect the possibility of payment to the contingent alternate payee. Inaddition, if the contingent alternate payee does receive benefit payments, the monthly benefit amount willbe calculated based on the age of the contingent alternate payee as of the time payments begin to thecontingent alternate payee.)

[If a contingent alternate payee is to be named in the PBGC ModelSeparate Interest QDRO, use this language for section 9:]

Language for Including a Contingent Alternate Payee

49

c. Contingent Alternate Payee

The Contingent Alternate Payee is [Name of the ContingentAlternate Payee], and is the [spouse/former spouse/child/otherdependent] of the Participant. The Contingent Alternate Payee’smailing address is [address]. The Contingent Alternate Payee’sSocial Security Number is [Social Security Number].

[If a contingent alternate payee is to be named in the PBGC ModelShared Payment QDRO, use this language:]

SECTION 9.DEATH OF ALTERNATE PAYEE

a. If the Alternate Payee dies before the Participant, theContingent Alternate Payee named in subsection d, below, shall bepaid [$x/x%] of each of the Participant’s monthly benefitpayments. PBGC shall start payments to the Contingent AlternatePayee when PBGC starts payments to the Participant, or, ifpayments to the Participant have already started, after theAlternate Payee dies. Payments shall not be made until theContingent Alternate Payee submits a PBGC benefit application toPBGC.

b. Notwithstanding any other provision in this Order, PBGC shallmake payments to the Contingent Alternate Payee until the [earlierof the Participant’s or Contingent Alternate Payee’s death/earlierof: the Participant’s or Contingent Alternate Payee’s death, aspecific date, or the date PBGC is notified in writing of theoccurrence of [insert [specific event]].

c. If the Alternate Payee and the Contingent Alternate Payee diebefore the Participant, PBGC shall return the Participant’smonthly benefit payments to the amount that the Participant wouldbe receiving had there been no Order.

d. The Contingent Alternate Payee is [name of the ContingentAlternate Payee], and is the [spouse/former spouse/child/otherdependent] of the Participant. The Contingent Alternate Payee’smailing address is [address]. The Contingent Alternate Payee’sSocial Security Number is [Social Security Number].

Language for Including a Contingent Alternate Payee

50

(The PBGC Model Separate Interest QDRO can be modified to award the alternate payee a prorata portion of a subsidized early retirement benefit, payable if and when the participant begins toreceive the subsidized benefit. See pp. 15 and 16 for an explanation of a subsidized earlyretirement benefit. If so modified, PBGC assigns the amount of the subsidy to the alternate payeein the same proportion (with actuarial adjustments for payments already received by the alternatepayee) as the alternate payee’s separate interest share of the participant’s benefit. If the QDROis silent with respect to whether any portion of the subsidized early retirement benefit is assignedto the alternate payee, PBGC will pay the participant the entire subsidy.)

[If the alternate payee is to receive a pro rata portion of theparticipant’s subsidized early retirement benefit, insert thesection below in the PBGC Model Separate Interest QDRO, andrenumber sections 11 and 12 to 12 and 13, respectively.]

NOTE: Section 11 should not be included unless the Plan providesa subsidized early retirement benefit.

SECTION 11. SUBSIDIZED EARLY RETIREMENT BENEFITS

PBGC shall pay the Alternate Payee a pro rata share of any earlyretirement subsidy that is paid to the Participant at retirement.The Alternate Payee shall be entitled to a pro rata share of anyearly retirement subsidy provided to the Participant on the datethe Participant commences benefits, but not before. If theAlternate Payee commences receiving benefits on an unsubsidizedbasis before the Participant retires with a subsidized benefit,then the amounts payable to the Alternate Payee shall be increasedwhen the Participant retires with a subsidized benefit inaccordance with PBGC’s practices and actuarial principles in orderto provide the Alternate Payee with a pro rata share of the subsidy.The pro rata share shall be calculated in the same manner as theAlternate Payee’s share of the Participant’s retirement benefitsis calculated pursuant to the terms of this Order.

Appendix G — Language for Including Subsidized Early Retirement Benefits in a Separate Interest QDRO

Subsidized Early Retirement Benefits

51

Participants’ records in PBGC’s possession are protected under the Privacy Act of 1974(5 U.S.C. § 552a) and PBGC’s implementing regulations. In accordance with these rules, toobtain certain information about the participant’s pension entitlement in order to draft oramend a domestic relations order, the prospective alternate payee (or his or her guardian)must send in a written request to PBGC’s Disclosure Officer. The request must:

3 State that the information the alternate payee is requesting “will be used solely to obtain a qualified domestic relations order under state domestic relations laws”;

3 Be signed by the alternate payee and notarized;

3 Provide the participant’s name (and the participant’s social security number if known);

3 Describe the alternate payee’s relationship to the participant; and

3 Ask for the following information only:

l The name of a participant’s pension plan;

l The actual or estimated amount of the participant’s benefit under Title IV of ERISA;

l The form(s) in which the participant’s benefit is payable; and

l Whether the participant currently is receiving benefit payments under the plan or, if not, the earliest date(s) such payments could commence to the participant.

The request should be submitted directly to PBGC’s Disclosure Officer at:

Disclosure Officer Pension Benefit Guaranty Corporation1200 K Street, NWWashington, DC 20005-4026

If you have additional questions about this request, you can contact PBGC’s DisclosureOffice at 202-326-4040.

Appendix H — How to Obtain Certain Participant Information from PBGC

52

Actuarially Equivalent—Different benefitsor benefit forms having the same value as ofa given date using a specified set ofassumptions.

Alternate Payee—A participant’s spouse,former spouse, child, or other dependentwho, under a QDRO, has a right to receiveall, or a portion, of the participant’spension benefits under a plan.

Annuity—A form of benefit in whichpayments are made at regular intervals for aspecified period of time. The mostcommon form of annuity pays monthlybenefits for life.

Beneficiary—The person named to receivebenefits upon the death of a participant oralternate payee.

Benefit—A payment provided for under apension plan.

Certain-and-Continuous (C&C)Annuity—An annuity that pays benefitsover the longer of the recipient’s life or aspecified period.

Contingent Alternate Payee—An alternatepayee under a QDRO whose benefit iscontingent upon the death of an alternatepayee.

Defined Benefit Plan—A type of pensionplan that promises participants specifiedbenefits at retirement. Retirement benefitsusually are based on the number of years

worked for a company or in an industryand may also be based on salary duringthat time.

Defined Contribution Plan—A type ofpension plan in which an employee receivesthe amount in an individual account, whichincludes contributions made by theemployer and, if applicable, the employee.Retirement benefits are based on theamount in each participant’s account,adjusted for investment experience and planexpenses. The most common types ofdefined contribution plans include profit-sharing plans, 401(k) plans, employee stockownership plans (ESOPs), thrift savingsplans, and money purchase plans.

Domestic Relations Order—Anyjudgment, decree, or order (includingapproval of a property settlementagreement) that (1) provides child support,alimony payments, or marital propertyrights to a spouse, former spouse, child, orother dependent of a participant, and (2) ismade pursuant to a state’s domesticrelations law.

Earliest PBGC Retirement Date(EPRD)—The “earliest PBGC retirementdate” has a specific meaning for PBGCpurposes and is defined in PBGC regulation29 C.F.R. §4022.10. Typically, aparticipant’s age as of his or her EPRD willbe 55 unless (1) under the plan’s terms, theparticipant cannot receive a benefit until a

The following terms may be useful in understanding this booklet. These definitions aresimplified and apply to the information discussed in this booklet.

Glossary

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later age, or (2) PBGC determines under afacts-and-circumstances test that theparticipant could retire earlier than 55.PBGC tells each participant what his or herEPRD is in a benefit determination.

Guaranteed Benefits—The amount of apension plan’s benefit that is guaranteed byPBGC as of the plan’s termination date.

Joint-and-Survivor Annuity—An annuitythat pays benefits over the participant’slifetime and thereafter over the lifetime ofthe person named as the survivor.

Life Expectancy—The number of years aperson is expected to live, on average, after agiven age.

Lump Sum—A form of benefit payment inwhich the entire benefit is paid at one time.

Normal Retirement Age—The age fornormal retirement defined under a plan. Inmost cases, the normal retirement age willnot be greater than 65 years of age or, iflater, the fifth anniversary of the date theparticipant commenced participation underthe plan.

Participant—An employee or formeremployee who may be entitled to a benefitunder a pension plan, or whosebeneficiaries may be entitled to a benefit.A participant is said to participate in or tobe covered by the plan.

PBGC Model Child Support SharedPayment QDRO—The PBGC Model ChildSupport Shared Payment QDRO gives thealternate payee a portion of the participant’sbenefit payments under the plan during the

participant’s lifetime. This model isdesigned to provide child support only; it isa simpler version of the PBGC Model SharedPayment QDRO.

PBGC Model Separate Interest QDRO—The PBGC Model Separate Interest QDROdivides the value of the participant’sbenefits into two separate parts—one for theparticipant and one for the alternate payee.This model also allows for the assignmentof survivor benefits.

PBGC Model Shared Payment QDRO—The PBGC Model Shared Payment QDROgives the alternate payee a portion of theparticipant’s benefit payments under theplan during the participant’s lifetime. Inother words, the participant and thealternate payee share the payments. Thismodel also allows for the assignment ofsurvivor benefits.

PBGC Model Treat-as-Spouse QDRO—The PBGC Model Treat-as-Spouse QDROtreats the alternate payee as the participant’sspouse for purposes of a qualifiedpreretirement survivor annuity (QPSA), aqualified joint-and-survivor annuity (QJSA),or both. This model does not provide anypart of the participant’s benefit to thealternate payee as a shared payment orseparate interest.

Plan Administrator—The person orpersons who administer the plan. If no oneis designated as the administrator in theplan document, the employer is consideredto be the plan administrator.

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Qualified Domestic Relations Order(QDRO)—A QDRO is a domestic relationsorder that gives an alternate payee the rightto receive all or a portion of the benefitspayable to a participant under the plan, andthat PBGC determines meets certain legalrequirements with respect to informationthat must be provided, and provisions thatcannot be included, in such an order.

Qualified Joint-and-Survivor Annuity(QJSA)—A QJSA is a joint-and-survivorannuity where (1) the participant receives adefinite amount of money at regularintervals for life, and (2) after theparticipant dies, the surviving spouse (whomay be the spouse to whom the participantwas married at retirement, or a formerspouse who is treated by a QDRO as theparticipant’s spouse) receives a definiteamount of money (not less than 50% ormore than 100% of the amount received bythe participant before death) at regularintervals for life.

Qualified Preretirement SurvivorAnnuity (QPSA)—A QPSA is an annuityprovided to a surviving spouse when avested participant dies before receivingpayment of his or her benefit. The annuityis paid for the life of the surviving spouse(who may be the spouse to whom theparticipant was married at the time theparticipant died, or a former spouse who istreated by a QDRO as the participant’sspouse), is calculated based on the benefitthat had been earned by the participantbefore death, and generally is equal to thesurvivor’s portion of the QJSA. In PBGC-

trusteed plans, the surviving spouse mayelect to receive the QPSA in the form of astraight life annuity or certain-and-continuous annuity.

Single Life Annuity—An annuity that paysbenefits over a period of time that depends,at least in part, on the survival of only oneperson, for example, a straight life annuityor certain-and-continuous annuity.

Spousal Consent—A spouse’s written andnotarized agreement to allow theparticipant to waive the QPSA or elect aform of benefit other than a QJSA.

Spouse—Husband or wife as determinedunder applicable law. A QDRO canprovide that the participant’s former spousebe treated as the participant’s spouse forcertain pension benefits.

Straight Life Annuity—An annuity thatpays benefits over the recipient’s lifetime.Once the recipient dies, no further annuitypayments are payable to anyone.

Subsidized Early Retirement Benefit—Many plans allow “early retirement,” thatis, a participant may retire before theparticipant reaches the normal retirementage defined under a plan. Some plansactuarially reduce the early retirementbenefit to reflect the longer payout. Otherplans may not reduce the benefit at all—forexample, paying the same amount permonth starting at age 60 as the participantwould receive starting at age 65. To theextent that the benefit is not reducedactuarially, or only partially reduced, the

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benefit is a subsidized early retirementbenefit.

Survivor Benefit—The survivor part of apreretirement survivor annuity or a joint-and-survivor annuity that is paid to abeneficiary after the participant dies.

Value—The actuarially determined amountneeded at a point in time to provide aspecific monthly benefit at some time inthe future. Value depends on the amountof the monthly benefit payment, when thebenefit payments start and stop, the age(s)of the recipient(s), mortality assumptions,and interest assumptions. Also referred toas “present value” or “actuarial presentvalue.”

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For information about a pension plan that PBGC has trusteed, benefit informationwith respect to a participant in such a plan, or information about Qualified DomesticRelations Orders, call PBGC’s Customer Contact Center, 1-800-400-7242, or write toPBGC QDRO Coordinator, P.O. Box 151750, Alexandria, VA 22315-1750.(TTY/TDD users should call the Federal Relay Service toll-free at 1-800-877-8339 andask to be connected to 1-800-400-7242.)

To submit a domestic relations order to PBGC (or a draft order for a preliminary,informal review), send it to PBGC QDRO Coordinator, P.O. Box 151750,Alexandria, VA 22315-1750.

PRIVACY ACT NOTICE

The PBGC is giving you this notice (whether you are a participant or an alternate payee) pursuant to thePrivacy Act of 1974, as amended, 5 U.S.C. §552a (1994), as part of a collection of information from you relatedto a qualified domestic relations order. The PBGC uses the information collected to determine whether analternate payee is entitled to a portion (or all) of the participant’s benefit and to make appropriate payments.The Social Security Numbers provided are used by the PBGC to identify the participant’s and the alternatepayee’s records within the PBGC, to report income for tax purposes, and to respond to lawful requests forinformation from other individuals and entities. Your response is voluntary (although a court may require youto give the PBGC some or all of this information). However, the PBGC generally cannot pay any portion ofa living participant’s benefit to someone else, except as provided in a qualified domestic relations order. Failureto provide information to the PBGC including a Social Security Number may delay or prevent the PBGC frompaying a benefit to an alternate payee.

The PBGC may release information about you to other individuals and entities when necessary andappropriate under the Privacy Act, including: to third parties to make benefit payments to you; to a companythat was responsible for the pension plan or to entities related to that company; to a labor organization thatrepresents you; to obtain information from the Federal Aviation Administration relevant to a pilot or formerpilot’s eligibility for a disability benefit; to obtain your address from other sources when the PBGC does nothave a current or valid address for you; and to a limited extent to your spouse, former spouse, child, or otherdependent when such individual may be entitled to benefits from the PBGC.

The PBGC may also release information about you to appropriate law enforcement agencies when thePBGC becomes aware of a possible violation of civil or criminal law. If the PBGC, an employee of the PBGC,the United States, or another agency of the United States, is involved in litigation, the PBGC may providerelevant information about you to a court or other adjudicative body or to the Department of Justice when itrepresents the PBGC. The PBGC may also provide information about you to the Office of Management andBudget in connection with review of private relief legislation or to a Congressional office in response to aninquiry that office makes about you at your request.

The PBGC publishes notices in the Federal Register that describe in more detail when information aboutyou may be made available to others. A copy of the most recent Federal Register notice may be obtained fromthe PBGC’s Customer Contact Center by calling 1-800-400-7242. If you use a TTY/TDD, call toll-free 1-800-877- 8339 and give the communications assistant the PBGC’s telephone number. The PBGC’s authority tocollect information from you, including your Social Security Number, is derived from 29 U.S.C. §§1055,1056(d)(3), 1302, 1321, 1322, 1322a, 1341, and 1350 (1994).

Revised October 2006

Pension Benefit Guaranty Corporation1200 K Street, NWWashington, DC 20005-4026www.pbgc.gov

QualifiedDomestic RelationsOrders & PBGC

Documents

Qualified Domestic Relations Orders & PBGC · qualified domestic relations order, or “QDRO.” The model QDROs and accompanying guidance in PBGC’s booklet, Qualified Domestic