QDRO Corner: Survivor Benefit and Beneficiary Elections

Apr 6

Defined benefit plans allow for a participant to elect to provide a survivor benefit. A survivor benefit is a monthly payment to a survivor which begins upon the death of the plan participant. In Maryland this is a separate benefit from the participant’s retirement benefit and must be requested and treated as a separate asset in court or when negotiating a settlement.

A participant must make an election at retirement (or sooner) if the participant is going to provide a survivor benefit for a spouse. However, this election is not reliable for a former spouse expecting to receive a survivor benefit in the future. This is true for a few reasons:

First, some plans, like the CSRS and FERS will automatically terminate survivor benefit elections made prior to a divorce, even if the participant is already retired and in pay status. (Typically, once a participant is in pay status no changes can be made to a survivor benefit election).

Second, if the participant is not yet in pay status, then the election form can be voided by the participant, and a new election made either for someone else, or for no one else. (Typically, a participant can change their survivor benefit elections at will prior to retiring, or going into pay status).

Third, some plans require that a survivor benefit be provided for a current spouse, unless waived. If the participant remarries without a COAP in place, then the plan rules may require a survivor benefit for a new spouse.

It is important that even if the former spouse is only awarded a survivor benefit from the participant’s defined benefit plan that the former spouse get the benefit secured by a COAP or QDRO. The QDRO should explicitly state the benefit for the former spouse, and be submitted timely with the divorce to limit the opportunity for problems. If you want to know if your QDRO language is clear, please reach out and we can review your Order.

If you have any QDRO questions, please reach out to Veronica Dulin at vdulin@markhamlegal.com.

Leslie Miller

Leslie Miller has prepared hundreds of retirement orders for federal, state and local governments as well as a wide variety of private, religious, and educational organizations. The experience with so many retirement plans helps Leslie advise clients with their own retirement division goals.