Qualified Domestic Relations Order
(Separate Interest) (Defined Benefit Plan)

Summary

Plan administrators can use and customize this form as a model qualified domestic relations order (QDRO) providing a separate interest to an alternate payee derived from a participant’s plan benefit. This template includes practical guidance, drafting notes, and alternate clauses. Generally, there are two methods for a QDRO to divide a participant’s interest in a plan: the separate interest approach and the shared interest approach. Under the shared interest approach, the alternate payee simply shares a portion of the participant's benefits when payments are made to the participant and in the same form as the participant. Under a shared interest QDRO, the alternate payee cannot elect a form of benefit that is different from the form of benefit elected by the participant at the time of benefit commencement. Under the separate interest approach, the participant's accrued benefit is divided into separate portions. Instead of the alternate payee simply receiving a portion of each payment made to the participant as under a shared interest QDRO, the alternate payee will have a separate benefit carved out of the participant’s accrued benefit and generally be treated like a participant in the plan. As a result, the alternate payee’s portion can be paid at a different time and in a different form from that form and time chosen by the participant. Be aware, however, that the plan may not allow the alternate payee to share in any early retirement benefits for which the participant qualifies, like a favorable discount or even a lump-sum optional form of payment, unless the alternate payee commences after the participant has earned the benefit (or retires with them). In many divorce or legal separation cases, a pension plan interest is the most significant asset of marital property. A court or family agency may issue a domestic relations order (DRO) to provide for payment of a portion of a plan participant’s qualified pension benefits to the participant’s spouse or former spouse as part of the division of marital property or for spousal support. Child support can also be paid from a participant’s plan benefits to a child or other dependent of the participant. The plan administrator must review any DRO to determine that it meets the requirements for qualification (i.e., to be treated as a QDRO, both under the specific terms of the individual qualified plan and the requirements as set forth in I.R.C. § 414(p)(2), (3)) and ERISA). If it does not satisfy the requirements, the plan administrator must reject the DRO or otherwise provide for the amendment of the DRO so that it is qualified. This form has been designed for a defined benefit plan QDRO where the plan administrator has chosen to provide a model QDRO to the participant, the prospective alternate payee, or the legal representative of either. Providing these individuals with a model QDRO can facilitate the plan administrator’s review of the draft QDRO to see that it is qualified. However, a plan administrator cannot require use of this or any model. This form has been drafted to apply to a traditional defined benefit plan (i.e., one that is not a cash balance plan or other statutory hybrid plan). Upon receiving a request for the plan’s QDRO information, the plan administrator should provide at a minimum copies of the plan’s: • Summary plan description (SPD) and information on how to obtain additional plan documentation • QDRO verification procedures –and– • Model QDRO (if applicable) For a further discussion regarding QDRO requirements and administration, see QDRO Rules and Review Procedures. For additional information about QDROs, including forms to assist the plan administrator in the administrative process, see QDRO Resource Kit. For an annotated model shared interest QDRO for a defined benefit plan, see . For an annotated model QDRO for a defined contribution plan, see Qualified Domestic Relations Order (Separate Interest) (Defined Contribution Plan)