If there is insufficient cash for immediate offset, does a QDRO have to award 50% of the marital portion to the non-employee spouse?
Mark K. Altschuler, Actuary, answers:
If there are other marital assets in addition to the pension, counsel for the employee spouse should consider the fact that giving the non-employee spouse 50% may be too much. An offset calculation can be used to determine the cash owed to the non-employee spouse after the pension is valued. If the liquid assets are sufficient, the equitable distribution can be settled by immediate offset. If not, the QDRO percentage is determined by dividing the cash owed the non-employee spouse by the marital value of the pension. For example, suppose the non-employee spouse is owed $80,000, the marital present value of the pension is $250,000, and the employee spouse has insufficient cash for immediate offset. Under the QDRO, the non-employee spouse will receive $80,000/$250,000, or 32% of the marital portion, which is significantly less than 50%.
Mark K. Altschuler, Actuary, is President of Pension Analysis Consultants, Inc., serving all 50 states from offices in Pennsylvania & Florida. He has performed over 25,000 pension valuations and QDROs, and is an affiliated member of the American Society of Pension Actuaries and Professionals (ASPPA).