Author Topic: Pension Calculation with QDRO  (Read 992 times)

blue_green_sparks

  • Bristles
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  • FIRE'd 2018
Pension Calculation with QDRO
« on: January 08, 2020, 08:43:46 AM »
I have a QDRO against one of my future pensions. Oh Joy. So the website says contact plan admin for estimates. Great. I call and the cubicle dweller says they can only calculate two points in time. I give them 62 and 65. The QDRO is a fixed amount at my age of 65 and adjust proportionately based on early or late commencement. It takes three months for a letter from the plan to arrive. Experts...are plan payouts generally linear so I can extrapolate based on two points?
« Last Edit: January 08, 2020, 08:45:38 AM by blue_green_sparks »

Need2Save

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  • Location: Maryland (USA)
Re: Pension Calculation with QDRO
« Reply #1 on: January 10, 2020, 07:35:18 AM »
Limiting to two estimate dates is pretty typical because a pension split due to a QDRO is generally calculated manually by the administrator. If you have a completed, court executed, and filed QDRO with the Plan, then the estimates you receive from the plan administrator should give you enough information to determine the value at interval future commencement dates.  If the QDRO has already been filed with them, they have already 'divided' the benefit between you and the other party.  Whether the value of the benefit is 'linear' depends on terms of the plan itself.

If you do not already have a copy, you should obtain or ask for a copy of the Summary Plan Description (SPD). As a participant in the plan the administrator must make this available to you. Within this document you should find sections on the rules of commencement and how the benefit is calculated. If you find the SPD is too slim in details, you can also request a copy of the full Plan Document which is typically much larger and more detailed, however often not in easy to read terms.

The future value of your pension benefit can depend on various factors like:  Are you still working for this company/accruing benefits? (it's not clear on your post whether you are the original pensioner/employee or the former spouse), your benefit payment options (annuity style or lump sum options), length of payment options such as a fixed 5 or 10 year payment option vs. a lifetime annuity payment, applicable early retirement reductions if you commence benefit at an earlier age often age 55 (these options will be spelled out in the SPD with the applicable % reduction), current and future changes to interest rates assumptions adopted by the plan sponsor, etc. There are also differences between cash balance plans vs. your typical defined benefit plan.