Retirement & Pension Division Flashcards
7 cards from real CDA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Retirement & Pension Division flashcards as text
Which type of retirement plan typically requires a QDRO to divide benefits at divorce?
Answer: Defined benefit pension plan
Defined benefit pension plans are employer-sponsored ERISA plans that require a QDRO to divide marital benefits, unlike IRAs which use a transfer incident to divorce.
Under a QDRO, the alternate payee spouse is generally taxed on distributions how?
Answer: At the alternate payee's own tax rate
A QDRO allows the alternate payee to receive distributions taxed at their own marginal rate, separating the tax liability from the participant.
Which valuation method for a defined benefit pension assigns the marital share based on the ratio of marital service years to total service years?
Answer: Coverture fraction method
The coverture fraction (time rule) divides the pension by multiplying the benefit by marital years of service divided by total years of service.
What happens to a QDRO if the plan participant dies before retirement and no survivor annuity was specified?
Answer: The alternate payee may lose all benefits if survivor coverage was not addressed
If the QDRO does not specify pre-retirement survivor annuity coverage, the alternate payee may receive nothing if the participant dies before distributions begin.
A 401(k) account valued at $120,000 at the divorce date had a marital contribution of $90,000. If using a net present value offset, the non-employee spouse is typically entitled to approximately:
Answer: $60,000
If the entire $120,000 is marital property, the non-employee spouse is entitled to half, or $60,000, under equal division of the marital account.
Which provision in a QDRO ensures the alternate payee shares in any cost-of-living adjustments (COLAs) to the pension benefit?
Answer: Separate interest approach
The separate interest approach gives the alternate payee their own independent benefit that includes COLAs, whereas the shared payment approach ties them to the participant's payment stream.
Which federal law governs most private-sector pension plan divisions and requires QDRO compliance?
Answer: ERISA
ERISA (Employee Retirement Income Security Act) governs private-sector qualified retirement plans and sets the legal framework for QDROs.