§35.08 Miscellaneous Provisions

• Jurisdiction: Washington

§ 35.08 MISCELLANEOUS PROVISIONS

Many tangential issues impact the amount awarded to an alternate payee and should be addressed in the QDRO.

[1] Amount or Percentage of the Benefit to be Assigned

The order must direct the plan administrator as to the methodology for assigning and apportioning benefits to the alternate payee.

[a] Date of Valuation

The date used to value the participant's accrued benefit may have a significant impact on the amount assigned. This is a state law issue, e.g., date of separation/divorce, the date of termination of employment, or the "earliest retirement date." The plan's valuation date(s) and the plan's allocation date(s) must also be accounted for in selecting the date for valuing the participant's accrued benefit.

[b] Defined Benefit Plans: Apportionment of Plan Benefits

The method used to apportion plan benefits is also matter of state law. Common methods of apportioning benefits include a percentage amount (e.g., 50 percent of each monthly payment), a flat amount (e.g., $500 of each monthly payment), or a fractional method in which the accrued benefit is multiplied by a fraction sometimes referred to as the Brown formula. In re Marriage of Brown, 15 Cal. 3d 838, 126 Cal. Rptr. 633, 544 P.2d 561 (Cal. 1976). Under Brown,

(1) If the accrued benefit is valued as of the date of separation from service or retirement:

(a) the numerator is the number of months the participant was in the plan and was married (or to the date of separation) times 50 percent times the accrued benefit, and
(b) the denominator is the total number of months the participant was in the plan.

(2) If the accrued benefit is valued as of the date of divorce or separation of the spouses:

(a) the numerator is the number of months the participant was in the plan and was married (or to the date of separation) times 50 percent times the accrued benefit, and
(b) the denominator is the total number of months the participant was in the plan to the date of divorce/separation.

The amount assigned to the alternate payee varies significantly depending on whether the denominator of the fraction uses the date of retirement or date of divorce. In addition, the date the accrued benefit is valued will also impact the amount assigned, e.g., accrued benefit as of the date of retirement or as of the date of divorce. By using the figures as of the date of divorce/separation, the alternate payee's interest will be frozen.

In dividing the participant's interest in a defined...