In deciding how to divide a participant's pension benefits in a QDRO, it is also important to consider two aspects of a participant's pension benefits: the benefit payable under the plan directly to the participant for retirement purposes (referred to here as the retirement benefit), and any benefit that is payable under the plan on behalf of the participant to someone else after the participant dies (referred to here as the survivor benefit).
One approach that is used in some orders is to split the actual benefit payments made with respect to a participant under the plan to give the alternate payee part of each payment.
This approach to dividing retirement benefits is often called the shared payment approach.
Orders that seek to divide a pension as part of the marital property upon divorce or legal separation often take a different approach to dividing the retirement benefit.
These orders usually divide the participant's retirement benefit (rather than just the payments) into two separate portions with the intent of giving the alternate payee a separate right to receive a portion of the retirement benefit to be paid at a time and in a form different from that chosen by the participant.
The basic retirement benefit is generally provided in the form of periodic payments for the participant's life beginning at what the plan calls normal retirement age.
This stream of periodic payments is generally known as an annuity.
Parties drafting a QDRO should read the plan's summary plan description and other plan documents to understand what pension benefits are provided under the plan.
Pension plans may be divided generally into two types: Defined Benefit Plans and Defined Contribution Plans.
The order must also specify the number of payments or period to which it applies, and such orders often satisfy this requirement simply by giving the alternate payee the right that the participant would have had under the plan to elect the form of benefit payment and the time at which the separate interest will be paid.