Using QDRO with Early and Late Adjustments

If your company intends to calculate QDRO benefits using Pension Administration, you need to be sure your plan rules support these calculations. Although the system doesn't calculate the initial benefit (a court specifies the amount), QDRO benefits are subject to early commencement reductions. Therefore, you need to keep QDRO processing in mind as you set up your adjustment rules.

To perform calculations for QDRO alternate payees, the administrator first creates an employee ID (actually, a "non-employee" ID), for the alternate payee. This enables users to run the QDRO calculation based on the alternate payee ID.

Note: Because the calculation is based on the QDRO payee's ID, all aliases referencing employee data are resolved based on the QDRO alternate payee's data, not the original employee's data. It is extremely important to keep this in mind as you set up your plan rules.

For example, the alias BIRTH_DT would produce the alternate payee's date of birth, not the original employee's date of birth.

The alias SBIRTH_DT, which normally references an employee's spouse's birth date, is usually not valid for QDRO calculations, which do not incorporate any reference to a new spouse. If you want to reference the original employee's birth date in a QDRO calculation, use the special alias QDRO_EE_BD (QDRO employee birth date).

This is an especially useful alias for determining early and late adjustments. For example, Paul and Mary got divorced and Mary has a QDRO giving her part of Paul's pension benefit. The plan's usual early adjustment factor is a 6 percent per year reduction for each year between ages 65 and 60. When Mary elects to begin benefits, Paul is 62 and Mary is 58. Her benefit should be reduced by 18 percent because the reduction is based on Paul's age when she starts receiving payments. Therefore, the Early/Late Adjustments definition used in Mary's calculation needs to reference Paul's age. In order to get to this information, use QDRO_EE_BD.

You may need to use different definitions for the original employee and the alternate payee. The difference is based not on different plan rules, but on the fact that for the employee's benefit, the original employee's own age is used, whereas for the alternate payee's benefit, the alternate payee's age is generally not used.

You handle this requirement through the system's grouping capabilities. Your function result might look like this:

Group Criteria

Definition

Regular employees

6 percent per year from employee's age (BIRTH_DT) 65 to 60

QDRO alternate payees

6 percent per year from original employee's age (QDRO_EE_BD) 65 to 60