This booklet provides general information to attorneys and other pension professionals on

qualified domestic relations orders (QDROs) submitted to the Pension Benefit Guaranty

Corporation (PBGC) after PBGC becomes trustee of a terminated pension plan. The

information summarizes PBGC’s rules at the time that the booklet was printed. It is not

intended to give legal advice or to replace the advice of an attorney. None of this information

takes precedence over legislation, regulations, or specific interpretations or rulings.

The information does not represent the government’s interpretation of the rules

governing QDROs. Interpretation of those rules is within the jurisdiction of the 

U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS). 

This booklet may be obtained from PBGC’s Web site on the Internet at www.pbgc.gov 

or by calling PBGC at 1-800-400-PBGC. (TTY/TDD users may call the Federal Relay Service

toll-free at 1-800-877-8339 and ask to be connected to this number.)

For additional information, DOL’s publication QDROs — The Division of 

Pensions Through Qualified Domestic Relations Orders is available on the Internet at

www.dol.gov/ebsa/publications/qdros.html or by calling the Employee Benefits Security

Administration Publication Hotline at 1-800-998-7542.

IRS Notice 97-11 (“Providing Sample Language for a Qualified Domestic Relations Order”)

was published January 13, 1997, at 1997-2 I.R.B. 49, and appears in its entirety in Appendix C

of DOL’s QDRO publication.

REQUIRED PAPERWORK REDUCTION ACT NOTICE

Under ERISA, PBGC may not divide the pension of a person involved in a divorce unless PBGC

receives a domestic relations order and qualifies it (known as a qualified domestic relations order, or

“QDRO”). The model QDROs and accompanying guidance in PBGC’s booklet, Divorce Orders & PBGC,

are intended to assist parties by making it easier to comply with statutory requirements. Under the

Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to

respond to, a collection of information unless it displays a currently valid OMB control number. This

collection of information has been approved by the Office of Management and Budget (OMB) under

control number 1212-0054 (expires 12/31/06). The information provided to PBGC may be disclosable

under the Freedom of Information Act and the Privacy Act.

PBGC estimates that the average burden of preparing a QDRO with the assistance of PBGC’s

booklet will be 1

/4 hour of the alternate payee’s time and $734 in professional fees if the alternate

payee hires an attorney or other professional to prepare the QDRO, or 10 hours of the alternate

payee’s time if the alternate payee prepares the QDRO without hiring an attorney or other professional.

Comments concerning the accuracy of this estimate or suggestions for further reducing this burden may

be sent to Pension Benefit Guaranty Corporation, Office of the General Counsel, 1200 K Street NW,

Washington, DC 20005-4026.
1

Page

I PBGC and Qualified Domestic Relations Orders 2

II PBGC Model QDROs 4

PBGC Model Separate Interest QDRO 5

PBGC Model Shared Payment QDRO 9

PBGC Model QDRO Instructions 13

III Procedures and Checklist 22

IV Glossary 25

Appendix A Defined Benefit Pension Plans and PBGC Benefit Rules 28

Appendix B QDROs Issued Before PBGC Becomes Trustee 30

Appendix C QDRO Tax Rules 31

This December 2003 edition of PBGC’s Divorce Orders & PBGC booklet includes updated contact

information and other minor updates to the August 2000 edition.

PBGC now offers more choices of annuity benefit forms to individuals not yet in pay status. The

instructions and model QDROs in this booklet have not yet been revised to reflect the availability of

these additional annuity benefit forms.

A participant who is not yet in pay status now may choose a: (1) straight-life annuity, (2) 5-year certainand-continuous annuity, (3) 10-year certain-and-continuous annuity, (4) 15-year certain-and-continuous annuity,

(5) joint-and-50%, -75%, or -100% survivor annuity, and (6) joint-and-50%-survivor “pop-up” annuity. The

annuity benefit form available to an alternate payee who is not yet in pay status depends on the type of

QDRO. With a separate interest QDRO, an alternate payee may choose from among optional annuity benefit

forms (1) through (4) offered by PBGC, regardless of what benefit form the participant chooses. With a shared

payment QDRO, the alternate payee will receive a portion of each payment that is being paid to the participant

in an amount designated by the QDRO; the alternate payee does not choose the annuity benefit form.

PBGC will provide specific information about the choices of annuity benefit forms at the time a participant

or alternate payee applies to commence benefits. For more information on these benefit forms, see PBGC’s

publication Your PBGC Benefit Options: Questions and Answers for Participants, which is available on PBGC’s

Web site under Pension Participant Publications at www.pbgc.gov/publications/particpubs.htm. You may also

contact PBGC’s Contact Center at 1-800-400-7242 to receive a copy of the publication. More detailed

information is available by reviewing PBGC’s benefit payments regulations (29 CFR 4022).

The Divorce Orders & PBGC booklet will be updated and reprinted to reflect the availability of these

additional annuity benefit forms, as well as other changes, in the near future. PBGC will issue a technical

release when we have incorporated these major revisions into the booklet.

Contents
2

The Pension Benefit Guaranty

Corporation (PBGC) is a federal agency

that insures the benefits of nearly 

44.3 million working men and women

in more than 31,000 private-sector defined

benefit pension plans. A defined benefit

pension plan that does not have enough

money to pay benefits may be terminated if

the employer responsible for the plan faces

severe financial difficulty, such as

bankruptcy, and is unable to maintain the

plan. In such an event, PBGC becomes

trustee of the plan and pays pension

benefits, subject to legal limits, to plan

participants and beneficiaries. PBGC’s rules

on benefit amounts and benefit forms

payable by PBGC are summarized in

Appendix A and can be found in 29 C.F.R.

4000 et. seq. 

The benefits of a pension plan

participant generally may not be assigned

or alienated. The law provides an exception

for domestic relations orders that relate to

child support, alimony payments, or

marital property rights of an alternate payee

(a spouse, former spouse, child, or other

dependent of a plan participant). The

exception applies only if the domestic

relations order meets specific legal

requirements that make it qualified, i.e., 

a qualified domestic relations order, or

“QDRO.” See section 206(d) of the

Employee Retirement Income Security Act,

as amended, and section 414(p) of the

Internal Revenue Code of 1986.

I PBGC and Qualified Domestic Relations Orders

PBGC reviews a submitted domestic

relations order to determine whether the

order is qualified before paying benefits to

an alternate payee.

PBGC QDRO Requirements

Identity of the plan participant, each

alternate payee, and each pension plan. 

A QDRO must specify the name and 

last known mailing address of the plan

participant and each alternate payee covered

by the order. A QDRO also must identify

the name of each plan to which the order

applies — if possible, this should be the

plan’s formal name.

Amount to be paid, when payments

start, and payment form. A QDRO must

specify or allow the alternate payee to

choose when payments to the alternate

payee start and the form of payments. A

QDRO also must state how much of the

plan participant’s benefit is to be paid to the

alternate payee, such as a dollar amount or

percentage of the benefit, or make clear the

manner in which the dollar amount or

percentage is to be determined.

When benefits stop, and what happens

on the death of the plan participant or the

alternate payee. A QDRO should specify

when benefits to the alternate payee stop. It

also should specify whether benefits will be

paid to an alternate payee on account of the

death of the participant and, if so, the

amount of the benefits. In particular, a
3

QDRO should specify whether the

alternate payee will be treated as the

participant’s spouse for purposes of any

survivor benefits. A QDRO also should

specify what happens when the alternate

payee dies. 

What A QDRO Must Not Include

A QDRO must not require PBGC to:

• provide any type or form of benefit, or

any option, not otherwise provided by

PBGC or allowed by ERISA and the

Code;

• pay benefits with a value in excess of the

value of benefits that would otherwise be

payable by PBGC or allowed by ERISA

and the Code; or

• pay benefits to an alternate payee when

those benefits are required to be paid to

another alternate payee under an order

previously determined to be a QDRO.
4

PBGC has developed two model

QDROs for use after a defined benefit plan

has terminated and PBGC has become

trustee of the plan: a PBGC Model

Separate Interest QDRO and a PBGC

Model Shared Payment QDRO. A QDRO

should be clear as to whether the alternate

payee is to receive a portion of the overall

value of the participant’s pension or just a

portion of each of the participant’s pension

payments. PBGC’s Model QDROs make

this distinction clear.

The PBGC Model Separate Interest

QDRO is intended to be used when an

alternate payee wishes to receive pension

benefits without regard to when the

participant starts payments and without

regard to the form of the participant’s

payments. The value of a participant’s

accrued benefit is divided into two separate

parts — one for the participant and one for

the alternate payee. The PBGC Model

Separate Interest QDRO gives the alternate

payee control over the timing and form of

II PBGC Model QDROs

his or her benefit payments. The alternate

payee can receive pension benefits over his

or her lifetime rather than the participant’s

lifetime, and can start his or her payments

before or after the participant starts

payments. The PBGC Model Separate

Interest QDRO may only be used if the

participant’s benefit payments have not

started.

With the PBGC Model Shared Payment

QDRO, the plan participant and the

alternate payee “share” each benefit

payment. The model may be used regardless

of whether the participant has started

payments, but the alternate payee cannot

start receiving benefits before the

participant starts receiving benefits. Under

the PBGC Model Shared Payment QDRO,

the timing and duration of payments to the

alternate payee will be tied to the

participant’s payments. Payments to the

alternate payee stop when the participant

dies unless the QDRO provides that the

alternate payee is to receive survivor

benefits.
5

QUALIFIED DOMESTIC RELATIONS ORDER

This Order is intended to be a qualified domestic relations

order (“QDRO”), as that term is defined in section 206(d) of the

Employee Retirement Income Security Act of 1974 (“ERISA”) and

section 414(p) of the Internal Revenue Code of 1986 (“Code”). 

This Order is granted in accordance with [applicable state

domestic relations law citations], which relate to marital

property rights, child support, and/or spousal support between

spouses and former spouses in matrimonial actions.

SECTION 1. IDENTIFICATION OF PLAN

This Order applies to benefits under the [formal name of plan]

(“Plan”). The Pension Benefit Guaranty Corporation (“PBGC”) is

trustee of the Plan.

SECTION 2. IDENTIFICATION OF PARTICIPANT AND ALTERNATE PAYEE

a. [Name of the Participant] is hereafter referred to as the

“Participant.” The Participant’s mailing address is [specify

address]. The Participant’s Social Security Number is [specify

Social Security Number]. The Participant is not receiving

benefits from PBGC with respect to this Plan. 

PBGC Model Separate Interest QDRO

PBGC Model Separate Interest QDRO

IN RE MARRIAGE/SUPPORT OF

__________________

PETITIONER,

V.

__________________

PARTICIPANT,

RESPONDENT.

X

:

:

:

:

:

:

:

:

X

CASE NO. ____________

IN THE ___________ COURT OF ______________ 

DIVISION ______________ COUNTY ______________

(You may use this model when a defined benefit pension plan has terminated, PBGC has become

trustee of the plan, and the parties want PBGC to divide the value of the participant’s accrued

benefit between the participant and the alternate payee. You may use this model only if payment

of the participant’s benefits has not started.) 
6

b. [Name of the Alternate Payee] is hereafter referred to as the

“Alternate Payee.” The Alternate Payee’s mailing address is

[specify address]. The Alternate Payee’s Social Security Number is

[specify Social Security Number]. The Alternate Payee is the

[spouse/former spouse/child/other dependent] of the Participant.

SECTION 3. AMOUNT OF BENEFIT TO BE PAID TO ALTERNATE PAYEE

Starting at the time specified in section 5, PBGC shall pay to

the Alternate Payee as a separate interest an amount actuarially

equivalent to the value of [$x per month/x%] of the Participant’s

accrued benefit. The Participant’s accrued benefit shall be

determined as of [date of divorce/date of plan termination/some

other date]. 

SECTION 4. PBGC BENEFIT LIMITATIONS

If PBGC adjusts the Participant’s benefit after PBGC approves

this Order, any reduction shall be applied by decreasing [pro rata

the Participant’s and the Alternate Payee’s benefits/the value of

the Participant’s remaining accrued benefit first/the value of the

Alternate Payee’s separate interest first/specify another way],

and any increase shall be applied by increasing [pro rata the

Participant’s and the Alternate Payee’s benefits/the value of the

Participant’s remaining accrued benefit first/the value of the

Alternate Payee’s separate interest first/specify another way].

SECTION 5. BENEFITS START

PBGC shall start payments to the Alternate Payee on [such future

date as the Alternate Payee elects/a future specified

date/submission of the Order]. Payment shall not be made until the

Alternate Payee submits an application to PBGC. 

SECTION 6. FORM OF BENEFIT

PBGC shall pay the Alternate Payee’s benefit in the form of a

[single life annuity over the Alternate Payee’s life/temporary

life annuity for child support or alimony].

SECTION 7. BENEFITS STOP

PBGC shall stop payments from the Alternate Payee’s separate

interest in accordance with the form of payment specified in

section 6. 

PBGC Model Separate Interest QDRO
7

SECTION 8. DEATH OF PARTICIPANT

The Participant’s death shall not affect payments under the

Alternate Payee’s separate interest. 

SECTION 9. DEATH OF ALTERNATE PAYEE 

a. If the Alternate Payee and, if applicable, the Contingent

Alternate Payee, dies before commencing benefits, the separate

interest shall [revert to the Participant/be forfeited to PBGC]. 

b. OPTIONAL: If the Alternate Payee dies before commencing

benefits, the Contingent Alternate Payee named below shall be paid

an amount actuarially equivalent to the value of the Alternate

Payee’s benefit determined under section 3. The Contingent

Alternate Payee’s separate interest shall be paid [specify start,

form, and stop]. Payment shall not be made until the Contingent

Alternate Payee submits an application to PBGC.

The Contingent Alternate Payee is [Name of the Contingent

Alternate Payee]. The Contingent Alternate Payee’s mailing address

is [specify address]. The Contingent Alternate Payee’s Social

Security Number is [specify Social Security Number]. The

Contingent Alternate Payee is the [spouse/former spouse/child/

other dependent] of the Participant.

SECTION 10. SPOUSAL RIGHTS OF FORMER SPOUSE AS ALTERNATE PAYEE

a. PBGC [shall/shall not] treat the Alternate Payee as the

Participant’s spouse for purposes of the Participant’s joint and

survivor annuity resulting from the accrued benefit in which the

Participant retains a separate interest. If the Alternate Payee

shall be treated as the Participant’s spouse, the Alternate

Payee’s right to the spousal survivor annuity shall apply to

[all/specify another portion] of the accrued benefit in which the

Participant retains a separate interest.

b. PBGC [shall/shall not] treat the Alternate Payee as the

Participant’s spouse for purposes of the Participant’s

preretirement survivor annuity resulting from the accrued benefit

in which the Participant retains a separate interest. 

If the Alternate Payee shall be treated as the Participant’s

spouse, the Alternate Payee’s right to the spousal preretirement

survivor annuity shall apply to [all/specify another portion] of

the accrued benefit in which the Participant retains a separate

interest.

PBGC Model Separate Interest QDRO
8

SECTION 11. COMPLIANCE WITH APPLICABLE LAWS

The parties to this Order intend that it comply with

applicable provisions of ERISA and the Code. Nothing in this Order

shall require PBGC:

a. To pay any benefits not permitted under ERISA or the Code;

b. To provide any type or form of benefit or any option not

provided by PBGC with respect to the Plan;

c. To pay total benefits with a value in excess of the value of

the benefits the Participant otherwise would receive under

Title IV of ERISA; or

d. To pay benefits to the Alternate Payee that are required to

be paid to another alternate payee under another QDRO that is

in effect prior to this Order.

SECTION 12. RESERVATION OF JURISDICTION

The Court reserves jurisdiction to amend this Order to establish

or maintain its status as a QDRO under ERISA and the Code.

IT IS SO ORDERED:

Date:___________ ___________________________

JUDGE

PBGC Model Separate Interest QDRO
9

QUALIFIED DOMESTIC RELATIONS ORDER

This Order is intended to be a qualified domestic relations

order (“QDRO”), as that term is defined in section 206(d) of the

Employee Retirement Income Security Act of 1974 (“ERISA”) and

section 414(p) of the Internal Revenue Code of 1986 (“Code”). This

Order is granted in accordance with [applicable state domestic

relations law citations], which relate to marital property rights,

child support, and/or spousal support between spouses and former

spouses in matrimonial actions.

SECTION 1. IDENTIFICATION OF PLAN

This Order applies to benefits under the [formal name of plan]

(“Plan”). The Pension Benefit Guaranty Corporation (“PBGC”) is

trustee of the Plan.

SECTION 2. IDENTIFICATION OF PARTICIPANT AND ALTERNATE PAYEE

a. [Name of the Participant] is hereafter referred to as the

“Participant.” The Participant’s mailing address is [specify

address]. The Participant’s Social Security Number is [specify

Social Security Number]. The Participant [is/is not] receiving

benefits from PBGC with respect to this Plan. 

PBGC Model Shared Payment QDRO

PBGC Model Shared Payment QDRO

(You may use this model when a defined benefit pension plan has terminated, PBGC has become

trustee of the plan, and PBGC is to pay the alternate payee a portion of the participant’s monthly

benefit payments. You may use this model either before or after the participant begins receiving

benefit payments.)

CASE NO. ____________

IN THE ___________ COURT OF ______________ 

DIVISION ______________ COUNTY ______________

IN RE MARRIAGE/SUPPORT OF

__________________

PETITIONER,

V.

__________________

PARTICIPANT,

RESPONDENT.

X

:

:

:

:

:

:

:

:

X
10

b. [Name of the Alternate Payee] is hereafter referred to as the

“Alternate Payee.” The Alternate Payee’s mailing address is

[specify address]. The Alternate Payee’s Social Security Number is

[specify Social Security Number]. The Alternate Payee is the

[spouse/former spouse/child/other dependent] of the Participant.

SECTION 3. AMOUNT OF BENEFIT TO BE PAID TO ALTERNATE PAYEE

a. Starting at the time specified in section 5, PBGC shall pay

to the Alternate Payee [$x/x%] of each of the Participant’s

monthly benefit payments. 

b. OPTIONAL: When [insert future event] occurs and PBGC is

notified, PBGC shall [increase/decrease] the amount paid to the

Alternate Payee from each of the Participant’s monthly benefit

payments to [$x/x%].

SECTION 4. PBGC BENEFIT LIMITATIONS

If PBGC adjusts the Participant’s benefit after PBGC approves

this Order, any reduction shall be applied by decreasing [pro rata

the Participant’s and the Alternate Payee’s benefits/the

Participant’s benefit first/the Alternate Payee’s benefit

first/specify another way], and any increase shall be applied by

increasing [pro rata the Participant’s and the Alternate Payee’s

benefits/the Participant’s benefit first/the Alternate Payee’s

benefit first/specify another way]. 

SECTION 5. BENEFITS START

PBGC shall start payments to the Alternate Payee [on such future

date as the Alternate Payee elects/on a future specified date/on

submission of the Order/when PBGC starts payments to the

Participant]. Payment shall not be made until the Alternate Payee

submits an application to PBGC, and payments shall not start

earlier than the date the Participant starts payments.

SECTION 6. FORM OF BENEFIT

PBGC shall pay the Alternate Payee the amount specified in

section 3 at the same time as the Participant’s benefit is paid to

the Participant.

PBGC Model Shared Payment QDRO
11

SECTION 7. BENEFITS STOP

Except for any survivor benefits described in section 10, PBGC

shall make payments to the Alternate Payee until the

[Participant’s death/earlier of the Participant’s death or the

occurrence of a specific date or event].

SECTION 8. DEATH OF PARTICIPANT

Except for any survivor benefits described in section 10, if the

Participant dies before the Alternate Payee, PBGC shall stop

payments, if any, to the Alternate Payee as of the first payment

that would have followed the Participant’s death.

SECTION 9. DEATH OF ALTERNATE PAYEE

a. If the Alternate Payee and, if applicable, the Contingent

Alternate Payee, dies before the Participant, PBGC shall return

the Participant’s monthly benefit payments to the level that the

Participant would be receiving had there been no QDRO. 

b. OPTIONAL: If the Alternate Payee dies before the Participant,

the Contingent Alternate Payee named below shall be paid [$x/x%]

of each of the Participant’s monthly benefit payments. PBGC shall

start payments to the Contingent Alternate Payee [on such future

date as the Contingent Alternate Payee elects/on a future

specified date/when PBGC starts payments to the Participant].

Payment shall not be made until the Contingent Alternate Payee

submits an application to PBGC.

The Contingent Alternate Payee is [Name of the Contingent

Alternate Payee]. The Contingent Alternate Payee’s mailing address

is [specify address]. The Contingent Alternate Payee’s Social

Security Number is [specify Social Security Number]. The

Contingent Alternate Payee is the [spouse/former spouse/child/

other dependent] of the Participant.

SECTION 10. SPOUSAL RIGHTS OF FORMER SPOUSE AS ALTERNATE PAYEE

a. PBGC [shall/shall not] treat the Alternate Payee as the

Participant’s spouse for purposes of the Participant’s joint and

survivor annuity. If the Alternate Payee shall be treated as the

Participant’s spouse, the Alternate Payee’s right to the spousal

survivor annuity shall apply to [all/specify another portion] of

the Participant’s accrued benefit.

PBGC Model Shared Payment QDRO
12

b. PBGC [shall/shall not] treat the Alternate Payee as the

Participant’s spouse for purposes of the Participant’s

preretirement survivor annuity. If the Alternate Payee shall be

treated as the Participant’s spouse, the Alternate Payee’s right

to the spousal preretirement survivor annuity shall apply to

[all/specify another portion] of the Participant’s accrued

benefit.

SECTION 11. COMPLIANCE WITH APPLICABLE LAWS

The parties to this Order intend that it comply with applicable

provisions of ERISA and the Code. Nothing in this Order shall

require PBGC:

a. To pay any benefits not permitted under ERISA or the Code;

b. To provide any type or form of benefit or any option not

provided by PBGC with respect to the Plan;

c. To pay total benefits with a value in excess of the value of

the benefits the Participant otherwise would receive under

Title IV of ERISA; or

d. To pay benefits to the Alternate Payee that are required to

be paid to another alternate payee under another QDRO that is

in effect prior to this Order.

SECTION 12. RESERVATION OF JURISDICTION

The Court reserves jurisdiction to amend this Order to establish

or maintain its status as a QDRO under ERISA and the Code.

IT IS SO ORDERED:

Date:___________ ___________________________

JUDGE

PBGC Model Shared Payment QDRO
13

Introductory Paragraph

Insert the applicable state domestic

relations law citations.

Section 1. Identification of Plan 

Insert the formal name of the plan covered

by this Order (i.e., the full name as stated in

plan documents). 

Section 2. Identification of 

Participant and Alternate 

Payee

(a) Insert the name, mailing address and

Social Security Number of the participant.

Also, in the PBGC Model Shared Payment

QDRO, indicate whether the participant is

or is not currently receiving benefit

payments from PBGC with respect to the

plan specified in section 1.

(b) Insert the name, mailing address and

Social Security Number of the alternate

payee. Specify the relationship

(spouse/former spouse/child/other

dependent) of the alternate payee to the

participant. 

The QDRO should be clear on the

identity of the participant and the alternate

payee. If an alternate payee is a minor or

legally incompetent, the QDRO must

include the name and address of the legal

representative who will receive checks made

out to the alternate payee.

Section 3. Amount of Benefit to Be 

Paid to the Alternate 

Payee

Insert the flat dollar amount, percentage of

the value of the participant’s accrued benefit,

or percentage of the participant’s benefit

payment that the alternate payee is to receive.

Also insert the date as of which the benefit is

to be calculated.

The parties must decide how much of the

plan participant’s benefit the alternate payee

will receive. Because the participant in a

defined benefit plan often does not know

the specific amount that will be paid at

retirement, this can be difficult for the

parties to address and for PBGC to interpret.

The assistance of an actuary may be helpful

in making these complex determinations.

PBGC Model QDRO Instructions

The following information on completing the PBGC model QDROs discusses each

provision separately but all of the provisions work together. The time that benefit payments

start and stop can affect the amount of benefits the participant and the alternate payee will

receive. Similarly, the form of benefit payments — whether benefits are paid as a single life

annuity or an annuity with survivor benefits — can affect the amount of benefits the parties

will receive.

The models are drafted assuming one plan and one alternate payee (and one contingent

alternate payee, if desired). If the QDRO is intended to cover more than one PBGC-trusteed

plan or more than one alternate payee, the QDRO should be clear as to which plan and

alternate payee each provision is addressing. One way of doing this is to repeat sections 1

through 10 as necessary. 
14

PBGC has found there is less confusion

with a QDRO that states a specific

percentage or amount, and the models are

drafted with that approach. If, instead, the

parties choose to include a formula, PBGC

will treat the domestic relations order as

qualified only if we can determine the

benefit under the formula based on the

information in the QDRO. The QDRO

must include any information that would

be necessary to determine the benefit

amount (for example, a child’s birth date if

the benefit stops when the child attains a

certain age).

The PBGC Model Separate Interest

QDRO provides that the alternate payee

will receive a benefit “actuarially

equivalent” to the value of a specified

portion of the participant’s accrued benefit.

PBGC will then determine the amount of

the alternate payee’s monthly benefit using

PBGC actuarial factors.

The PBGC Model Shared Payment

QDRO provides that the alternate payee

will receive a portion of each of the

participant’s benefit payments on or after

the date the participant starts benefit

payments. It allows the alternate payee’s

portion to increase or decrease at a specified

time or upon a specified event. The QDRO

must specify the amount and timing of any

change. The Shared Payment QDRO

cannot provide for payments to the

alternate payee to begin before PBGC

receives the domestic relations order.

(However, the order can give the alternate

payee increased initial payments.)

There are many ways to determine the

portion or value of an accrued benefit or

pension payment that the alternate payee is

to receive under a QDRO. The QDRO can

specify a dollar amount or a percentage or

provide a formula for determining the

amount or percentage. The dollar amount

or percentage can be based on the

participant’s entire benefit or payment, or

just on the part of the benefit or payment

earned during the marriage or up to the

date of division.

The PBGC Model Separate Interest

QDRO provides that the alternate payee is

to receive a specific amount or a percentage

of the value of the participant’s accrued

benefit (for example, 50% of the value of

the accrued benefit). In a Separate Interest

QDRO, the sum of the values of the

participant’s portion and the alternate

payee’s portion cannot exceed the total

value of the participant’s accrued benefit

before the alternate payee’s separate interest

was created. (Nor can it exceed the total

value of the benefit PBGC would have paid

the participant; see section 4 — PBGC

Benefit Limitations.)

The Separate Interest QDRO must

specify the date as of which the alternate

payee’s portion of the participant’s benefit

is to be determined. Typically, for QDROs

issued after PBGC trustees a plan, the

portions of benefits are determined based

on the participant’s accrued benefit as of

the date of divorce, separation, or plan

termination. (In plans trusteed by PBGC,

all benefit accruals will have ceased no later

than the date the plan terminated.) 
15

Example 1 - Separate Interest QDRO.

Carol is age 30 and Mark is age 40. Their

QDRO provides that Mark will receive a

50% interest in the pension benefit Carol

had accrued at the time of their divorce.

Carol’s accrued benefit at the time of the

divorce is $600 per month in the form of a

life annuity with payments beginning at

her age 65. Mark’s 50% interest in Carol’s

accrued benefit has a value that is

actuarially equivalent to a life annuity of

$300 ($600 x 50%) per month to Carol

beginning at her age 65. 

Mark is older than Carol, so a benefit of

$300 per month to Carol at age 65

generally will provide a different monthly

benefit for Mark regardless of when he

starts benefits. Mark’s actual monthly life

annuity payments will depend on his age

when he starts benefit payments and

PBGC’s actuarial factors.

The PBGC Model Shared Payment

QDRO provides that a specific amount or a

percentage of each of the participant’s

monthly benefit payments is paid directly

to the alternate payee (for example, $400 per

month, or 25% of each monthly benefit

payment). The combined benefit payments

to the participant and the alternate payee

under a Shared Payment QDRO cannot

exceed the benefit that would be paid to the

participant if the QDRO were not in effect.

Example 2 - Shared Payment QDRO.

Dick agrees to provide his former spouse,

Jane, with 25% of each of his monthly

pension payments once his payments start.

Dick’s payments will be $900 per month

beginning at age 65. Jane’s portion of

Dick’s payment will be $225 per month,

calculated as follows: $900 x 25% = $225.

Under the QDRO, Jane will receive $225

per month for Dick’s lifetime and Dick

will receive $675 per month ($900 - $225). 

In calculating the amount or percentage

to be given to the alternate payee under a

QDRO, the parties frequently will look at

what portion of the participant’s benefit or

payments was earned during the time the

alternate payee and the participant were

married. Under this method, the alternate

payee’s portion of the participant’s benefit

or payments (for example, 50%) would be

multiplied by a fraction, the numerator of

which is the number of years during the

parties’ marriage that the participant earned

benefits under the plan, and the

denominator of which is the total number

of years the participant earned benefits

under the plan. This method of allocating

the benefit is sometimes referred to as the

fractional or time method.

Example 3 - Fractional Method

(Separate Interest QDRO). Continuing

with Example 1, assume Carol had earned

benefits under the plan for 10 years as of

the date of the divorce and was married to

Mark for 5 of those years. If their QDRO

applied the fractional method to Mark’s

50% separate interest, Mark’s 50% would

be further reduced for the marriage

fraction of 5/10. Thus, Mark’s pension

would be actuarially equivalent to the

value of a single life annuity of $150 
16

($600 x 50% x 5/10) per month payable to

Carol beginning at her age 65. (If Mark

and Carol had been married 12 years, and

Carol had earned benefits for 10 of those

years, the marriage fraction would have

been 10/10, or 1.)

Section 4. PBGC Benefit Limitations 

Insert the method for allocating any

adjustments PBGC makes in benefits. Because

the parties may wish to handle benefit

increases and decreases differently, the models

include separate sentences for each. 

After trusteeing a plan, PBGC may

reduce benefits as necessary to meet the

limitations established by ERISA (see

Appendix A). PBGC pays estimated

benefits until it has completed its work on

the plan and determined final benefits. In

some cases — especially in plans with

incomplete records or complex benefit

structures — final benefit amounts will

differ from the estimated payments.

In general, if a QDRO awards a fixed

percentage of the participant’s benefit

payment to the alternate payee and provides

no guidance on benefit adjustments, PBGC

will proportionally adjust the benefits

payable to both the participant and the

alternate payee to reflect PBGC’s

adjustments to the participant’s total

benefit. If a QDRO awards a fixed dollar

amount of the participant’s benefit to the

alternate payee with no additional guidance,

PBGC will first increase or decrease the

participant’s benefit to reflect PBGC’s

adjustment. PBGC will not adjust the fixed

dollar amount awarded to the alternate

payee for an increase, and will reduce the

fixed dollar amount only if the total

decrease to be made exceeds the

participant’s benefit.

If the estimated payments are too low,

PBGC will pay the difference (plus interest)

in a single payment. If the estimated

payments are too high, PBGC will

actuarially reduce monthly benefit

payments (generally by no more than 10%)

to recover any overpayment gradually. The

benefit reduction will end when the

amount of the overpayment is recovered.

Section 5. Benefits Start

Indicate the date on which the alternate

payee’s benefit payments should begin. The

models allow for benefits to begin on a specific

date, a date elected by the alternate payee, or

submission of the order. The PBGC Model

Separate Interest QDRO may only be used if

the participant’s benefit payments have not

started. The PBGC Model Shared Payment

QDRO does not allow the alternate payee’s

payments to begin until the participant starts

receiving payments. The appropriate insert

will depend in part on whether the participant

has begun payments. 

The parties must decide whether they

want the alternate payee to have the right to

begin receiving benefit payments before the

participant does. The PBGC Model

Separate Interest QDRO permits the

alternate payee to specify the date his or her

benefits will start or to choose a starting

date at some later time. Payments to the
17

alternate payee may begin as early as the

participant’s “earliest retirement age” (or

earlier, if specifically allowed by the plan)

even if the participant has not started to

receive benefits. Payments must begin no

later than the date required under section

401(a)(9) of the Code (see Appendix C).

The “earliest retirement age” has a

specific statutory meaning for purposes of

QDROs. If the participant is still employed

by the employer who maintained the plan,

the earliest retirement age is the earliest age

(but not earlier than age 50) the participant

could receive benefits under the plan if the

participant were to separate from service. If

the participant is not actively employed, the

earliest retirement age is the earliest age the

participant could choose to begin receiving

benefits. 

Example 4. Continuing with Example 1,

the Separate Interest QDRO allows Mark

to start his benefit payments without

regard to when Carol’s benefit payments

start. For example, Mark may want to

begin receiving benefit payments at age 60

when Carol will be only 50 years old. If

Mark and Carol had used a Shared

Payment QDRO and Carol did not begin

receiving benefits until age 65 (normal

retirement age under the plan), Mark

would not be able to begin receiving

benefit payments until Carol did.

The PBGC Model Shared Payment

QDRO provides the alternate payee with a

portion of the participant’s benefit

payments during the period that the

participant receives benefits. If the

participant is already receiving benefit

payments, the alternate payee under the

PBGC Model Shared Payment QDRO may

begin receiving benefits upon PBGC’s

qualification of the order and submission of

the alternate payee’s application. If the

participant has not begun receiving benefit

payments, the alternate payee may not

begin receiving payments until the

participant does. 

Example 5. Continuing with Example 2,

PBGC will not begin paying benefits to

Jane under the Shared Payment QDRO

until the time that Dick begins receiving

his benefit payments.

Section 6. Form of Benefit 

Indicate the form of benefit to be paid to

the alternate payee. Generally, under the

PBGC Model Separate Interest QDRO the

form of the alternate payee’s benefit will be a

single life annuity. The PBGC Model Shared

Payment QDRO specifies that PBGC will pay

to the alternate payee the amount specified in

section 3 at the same time as it pays benefits to

the participant.

Generally, if a QDRO is issued after

PBGC becomes trustee of a plan, the only

form that PBGC will pay the alternate

payee as a separate interest is a single life

annuity for the life of the alternate payee.

However, the PBGC Model Separate

Interest QDRO allows payment of a

temporary life annuity for child support or

alimony. Parties or their representatives

should contact PBGC before including any

other benefit form in a QDRO to make

certain it is a form that PBGC pays.
18

(Normally, the single life annuity that

PBGC will pay can only be in the form of

an annuity for the life of the alternate

payee, but in the unusual circumstance

when PBGC will pay the participant in the

form of a certain and continuous annuity,

i.e., an annuity for the longer of the life of

the participant or a set number of years, the

alternate payee may also receive payments

in the certain and continuous form. The

PBGC Model Separate Interest QDRO does

not specifically address this form. More

information as to whether the alternate

payee is eligible for this form can be

obtained by contacting PBGC.)

Example 6. Continuing with Example 1,

the Separate Interest QDRO could

provide that Mark will receive benefits as a

life annuity, actuarially adjusted to reflect

the date payments begin and his life

expectancy. Alternatively, assuming that

the plan allowed payments before the

earliest retirement age, the QDRO could

provide that Mark’s benefit is payable as a

temporary life annuity for alimony. Either

benefit will have the same value as a $300

per month benefit payable to Carol over

her lifetime beginning at her age 65.

In the PBGC Model Shared Payment

QDRO, the alternate payee must receive his

or her payments as an annuity ending on

the earliest of the death of the participant,

the death of the alternate payee, or the

occurrence of a specified event. The

alternate payee cannot change the form of

benefit payments selected by the

participant. However, the PBGC Model

Shared Payment QDRO (like the PBGC

Model Separate Interest QDRO) can

provide spousal rights and thus affect the

form of benefit payment that the

participant can receive. For example,

section 10 of either model QDRO can

provide that the participant’s former

spouse, as the alternate payee, will be

treated as the participant’s spouse for

purposes of all or part of the participant’s

benefit. For the portion of the benefit for

which the alternate payee is treated as the

spouse, the participant cannot choose a

form of benefit other than a joint and

survivor annuity with the former spouse as

the beneficiary without the former spouse’s

consent at the time the pension is to begin. 

Example 7. Continuing with the Shared

Payment QDRO in Example 2, PBGC

will begin paying Jane’s portion of Dick’s

benefit no earlier than the time that Dick

begins receiving his benefit payments. If the

QDRO gives Jane spousal rights, Dick

must elect a joint and survivor annuity

with Jane as beneficiary, unless Jane

consents to Dick’s waiver of the joint and

survivor annuity.

Section 7. Benefits Stop 

Indicate when benefits will stop for the

alternate payee. This is generally governed by

the form specified in section 6. 

Once benefit payments to the participant

or the alternate payee have started, the form

of benefit will govern when benefits stop.

For example, the form may provide that
19

payments to an alternate payee will stop on

the participant’s death or upon specific

events such as the remarriage of the alternate

payee or the date a child attains a certain

age. (Parties must notify PBGC when an

event occurs that affects the benefit.)

Section 8. Death of Participant 

Indicate what happens to payments when

the participant dies. 

The PBGC Model Separate Interest

QDRO provides that PBGC will pay the

separate interest to the alternate payee

regardless of when the participant dies.

The PBGC Model Shared Payment

QDRO provides that payment of a benefit

to an alternate payee stops upon the death

of the participant (except to the extent the

alternate payee is to be treated as the

surviving spouse under section 10). 

Section 9. Death of Alternate Payee 

Indicate what happens when the alternate

payee dies. In the PBGC Model Separate

Interest QDRO, the focus is on the alternate

payee’s dying before beginning to receive

benefit payments. (If benefits to the alternate

payee have started, the form chosen governs

and there generally will be no survivor

benefits.) In the PBGC Model Shared Payment

QDRO, the focus is on the alternate payee’s

dying before the participant. In both cases,

PBGC gives the parties the option to name a

contingent alternate payee.

If a contingent alternate payee is named,

indicate when the contingent alternate payee

is to receive benefits and how much. Insert the

name, mailing address and Social Security

Number of the contingent alternate payee.

Specify the relationship (spouse/former

spouse/child/other dependent) of the

contingent alternate payee to the participant.

The PBGC Model Separate Interest

QDRO addresses what happens to the

alternate payee’s benefit if the alternate

payee dies before he or she begins receiving

benefit payments. If the Separate Interest

QDRO is silent on what happens if the

alternate payee dies before receiving benefit

payments, PBGC will treat the separate

interest as being forfeited to PBGC.

However, the QDRO could provide for a

contingent alternate payee (such as the

participant’s child or other dependent) to

get a benefit equal in value to the alternate

payee’s separate interest if the alternate

payee dies before commencing benefits.

Alternatively, the QDRO could name the

participant’s child as the alternate payee or

as a second (rather than contingent)

alternate payee. The parties also could

provide that, if the alternate payee (or a

contingent alternate payee) dies before

receiving benefits, the value of the separate

interest returns to the participant. The

Separate Interest QDRO cannot provide for

the benefit to go to an alternate payee’s (or

contingent alternate payee’s) estate.

The PBGC Model Shared Payment

QDRO addresses what happens to the

alternate payee’s benefit if the alternate

payee dies before the participant dies

(whether or not benefit payments have

started to the alternate payee). If the Shared
20

Payment QDRO is silent on any other

arrangement and the alternate payee (and

any contingent alternate payee) dies before

the participant, the participant’s monthly

benefit payments will be returned to the

amount that the participant would be

receiving had there been no QDRO. The

alternate payee cannot pass payments on to

another beneficiary upon death. However,

as with the PBGC Model Separate Interest

QDRO, the PBGC Model Shared Payment

QDRO could be drafted to cover multiple

or contingent alternate payees, such as

payments to the former spouse alternate

payee and then, upon the former spouse’s

death, to the participant’s children as

contingent alternate payees until they reach

the age of majority. 

Example 8. Continuing with the Shared

Payment QDRO in Example 2, Dick

retires and begins receiving his pension

benefits as a joint and survivor annuity.

Jane receives a 25% share of Dick’s benefit

payments. Two years after commencing

benefit payments, Jane dies. Because their

Shared Payment QDRO did not name a

contingent alternate payee, Jane’s portion

of Dick’s benefit payments reverts to Dick

at Jane’s death.

Section 10. Spousal Rights of Former 

Spouse as Alternate 

Payee 

Indicate whether the alternate payee will be

treated as the spouse of the participant for

purposes of part or all of the preretirement

survivor annuity and/or the joint and

survivor annuity. If the alternate payee is to

be treated as the spouse for all or any of the

benefit in which the participant retains a

separate interest or for the participant’s

accrued benefit, indicate “all” or specify the

portion with respect to which the alternate

payee will be treated as the spouse.

If a participant dies before starting

benefit payments, PBGC pays the

participant’s surviving spouse a

preretirement survivor annuity. If a

participant dies after starting benefit

payments in the form of a qualified joint

and survivor annuity (QJSA), PBGC pays

the participant’s surviving spouse the

survivor portion of the QJSA. Under either

model QDRO, the participant’s former

spouse, as the alternate payee, can be treated

as the surviving spouse (even if the

participant has remarried) for all or only a

portion of the survivor benefit of a

participant who has not yet begun to

receive payments. Thus, the alternate payee

can be designated as the spouse for the

preretirement survivor annuity and/or the

qualified joint and survivor annuity with

respect to either the participant’s accrued

benefit or the portion of the accrued

benefit in which the participant retains a

separate interest. These survivor benefits

could be in addition to a separate interest or

shared payment the alternate payee also has

a right to receive. PBGC will pay survivor

benefits in accordance with the terms of the

QDRO even if the participant has

designated a different beneficiary or has

remarried.
21

Example 9. Continuing with the

Separate Interest QDRO in Example 1,

Carol dies in an accident at age 35. Mark’s

separate interest in Carol’s pension benefit

is unaffected by her death. However,

assuming the QDRO is silent as to

survivor benefits, and because Carol and

Mark were not married at the time of

Carol’s death, Mark is not treated as

Carol’s spouse and will not receive a

preretirement survivor benefit.

Example 10. Continuing with the Shared

Payment QDRO in Example 2, assume

the QDRO provides that Jane will be

treated as Dick’s spouse for all of his

accrued benefit for purposes of survivor

benefits. When Dick retires, his pension

benefits start as a joint and 50% survivor

annuity. Under the terms of their Shared

Payment QDRO, Jane receives a 25%

portion of the total annuity benefit payable

during Dick’s life. Three years after

starting benefit payments, Dick dies.

Under the terms of their QDRO, Jane’s

25% portion of Dick’s benefit payments

stops at Dick’s death. However, Jane will

receive a survivor annuity for her lifetime

equal to 50% of Dick’s annuity benefit.

Section 11. Compliance with 

Applicable Laws 

The provisions in this section should be in

all QDROs submitted to PBGC, and the

parties’ attorneys or representatives should

ensure that the provisions are met.

Section 12. Reservation of 

Jurisdiction

Include the necessary language for the court

issuing the domestic relations order to retain

jurisdiction over the Order.
22

Benefit Payments During the Domestic

Relations Order Review. After PBGC

receives a certified or authenticated

domestic relations order, PBGC will

suspend payment to the participant of any

amounts that the domestic relations order

would give to the alternate payee. 

If PBGC determines that the order is

qualified, PBGC will begin making

payments (including any suspended

payments) to the alternate payee under the

QDRO (as specified) after the 45-day period

for filing an appeal has elapsed and the

alternate payee has completed an

application that provides the necessary

personal data. If an appeal is filed or a suit

is filed in court, PBGC will continue to

suspend payment of the benefits in

controversy until the appeal or suit is

resolved. 

If PBGC determines that the order is not

qualified, PBGC will lift the suspension and

make any back payments to the participant

as soon as the 45-day period for filing an

appeal has elapsed unless an appeal is filed

or the parties notify PBGC in writing that

PBGC will review a domestic relations

order certified or otherwise authenticated

under state domestic relations procedures to

determine whether the order is qualified,

and will inform the interested parties in

writing of its determination. Interested

parties include all parties named in the

order, their attorneys (if identified), and any

representative designated in writing by the

parties.

If PBGC determines the order is not a

QDRO, PBGC will explain the reason

along with its procedures for appealing the

determination. An appeal, or a request for

an extension of time to appeal, must be

filed within 45 days after the date of

PBGC’s determination.

At the request of a participant or an

alternate payee (or either of their

representatives), PBGC will informally

review a domestic relations order in draft

form to see if it will satisfy qualification

requirements. However, a draft order is not

a formal submission of an order and, except

in unusual circumstances, PBGC will take

no action on an informal review other than

notifying the submitting party. Once

PBGC has notified the party requesting the

review of its view, the party should submit

as soon as possible a certified or

authenticated copy of the final order to

PBGC for approval. PBGC can take no

formal action until the formal submission

of the certified or authenticated order.

III Procedures and Checklist

To submit a domestic relations order

to PBGC (or a draft order for a

preliminary, informal review), send it

to the PBGC QDRO Coordinator, 

P.O. Box 151750, Alexandria, VA

22315-1750.
23

they are trying to make the necessary

changes in the domestic relations order. 

In no case will PBGC suspend payments

for more than 18 months from the date the

first payment to the alternate payee would

have been due under the order. PBGC will

pay suspended benefits with interest.

Multiple Final Orders. After PBGC has

qualified an order, a second order

sometimes will be submitted attempting to

modify the first order. When this occurs,

PBGC will suspend benefit payments that

would be affected by the new order. If

PBGC qualifies the second order, changes

in benefit payments will be made

prospectively only. PBGC will not apply

retroactively the terms of a domestic

relations order.

Change of Address or Entitlement

Status. PBGC should be notified promptly

of any change in address. The parties also

should notify PBGC immediately if an

event occurs that affects benefits PBGC is

paying or will pay. For example, if

payments to the alternate payee would end

on a future event such as remarriage or a

child’s reaching a certain age, the parties

should notify PBGC immediately when

that event occurs. 

Checklist

PBGC suggests using the following

checklist when drafting a domestic relations

order that will be sent to PBGC:

✓ Does the order clearly specify the

PBGC-trusteed pension plan to which

it applies?

❏ Does the order clearly identify the

defined benefit pension plan (e.g.,

formal plan name)?

❏ Is the plan trusteed by PBGC?

✓ Does the order include the names of

the persons to whom it applies?

❏ Does the order clearly identify the

participant (e.g., full name, last

known mailing address, and Social

Security Number)?

❏ Does the order clearly identify each

alternate payee and, if applicable,

each contingent alternate payee (e.g.,

full name, last known mailing address,

and Social Security Number)?

❏ Does the order clearly identify each

alternate payee and, if applicable,

contingent alternate payee, as a

spouse, former spouse, child, or

other dependent of the participant?

❏ Does the order provide the name

and address of the legal

representative who will receive

checks made out to an alternate

payee and, if applicable, a contingent

alternate payee, who is a minor or

legally incompetent?

✓ Does the order specify the amount to

be paid to each alternate payee, the

length of time for the payment, and

the manner in which it will be paid?

❏ Does the order clearly specify the

amount or percentage (or state how

to determine the amount or

percentage) of the participant’s

accrued benefit or monthly benefit

payment to be paid to each alternate

payee?
24

❏ Does the order clearly specify (or

allow a future election that would

specify) when payments will start

for each alternate payee?

❏ Is it clear that the order does not

require PBGC to pay benefits that

have a value in excess of the value of

benefits to which the participant

would otherwise be entitled from

PBGC?

❏ Is it clear that the order does not

require PBGC to provide any type

or form of benefit, or any option,

that PBGC does not otherwise

provide to participants and alternate

payees with respect to the plan?

❏ Is it clear that the order does not

require PBGC to pay benefits to an

alternate payee that are required to

be paid to another alternate payee

under a previous QDRO?

❏ Is it clear that the order does not

require PBGC to pay benefits to an

alternate payee in an amount or

form that is not permitted under

ERISA or the Code?

❏ Does the order clearly require

payment to the alternate payee

(rather than, for example, to the

participant for payment to the

alternate payee)?

✓ What happens when the participant

dies?

❏ Does the order specify whether the

participant’s former spouse, as the

alternate payee, is to be treated as the

participant’s spouse with respect to

all or part of the participant’s

remaining separate interest or

participant’s benefit for purposes of

the preretirement survivor annuity

and/or the qualified joint and

survivor annuity?

✓ What happens when the alternate

payee dies?

❏ Does the order clearly specify what

happens to the alternate payee’s

separate interest, if any, when the

alternate payee dies before

commencing benefits?

❏ Does the order clearly specify what

happens to the participant’s benefit

when the alternate payee predeceases

the participant?

✓ Was the order issued under a State

domestic relations law?

❏ Was the order entered by a court of

competent jurisdiction?

❏ Is the order a judgment, decree, or

order (including approval of a

property settlement agreement)?

❏ Does the order relate to the

provision of child support, alimony

payments, or marital property rights

to a spouse, former spouse, child, or

other dependent of a participant?

❏ Is the order made pursuant to a State

domestic relations law (including a

community property law)?
25

Accrued Benefit – The benefit the

participant has earned under the plan.

Actuarially Equivalent – Having the same

value as of a given date using the same

assumptions. 

Alternate Payee – A participant’s spouse,

former spouse, child, or other dependent

who, under a Qualified Domestic Relations

Order, has a right to receive all, or a

portion of, the participant’s pension

benefits under a plan.

Annuity – A form of benefit in which

payments are made at regular intervals for a

specified period of time. The most common

form of annuity pays monthly benefits for

life.

Beneficiary – The person named to receive

benefits upon the death of a participant or

alternate payee.

Contingent Alternate Payee – An alternate

payee whose benefit is contingent upon the

death of another alternate payee or some

other event.

Defined Benefit Plan – A type of pension

plan that promises participants specified

benefits at retirement. Retirement benefits

usually are based on the number of years

worked for a company or in an industry

and may also be based on salary during that

time.

Defined Contribution Plan – A type of

pension plan in which an employee receives

the amount in an individual account, which

includes contributions made by the

employer and, if applicable, the employee.

Retirement benefits are based on the

amount in each participant’s account,

adjusted for investment experience. The

most common types of defined

contribution plans include profit-sharing

plans, 401(k) plans, employee stock

ownership plans (ESOPs), thrift savings

plans and money purchase plans.

Domestic Relations Order – Any

judgment, decree, or order (including

approval of a property settlement

agreement) that (1) provides child support,

alimony payments, or marital property

rights to a spouse, former spouse, child, or

other dependent of a participant, and (2) is

made pursuant to a state domestic relations

law.

Earliest Retirement Age – For purposes of

the QDRO rules, earliest retirement age is

the earlier of (1) the date the participant is

entitled to a payment of benefits under the

plan, or (2) the later of (a) the date the

participant reaches age 50 or (b) the earliest

date the participant could begin to receive

benefits if he or she no longer worked for

the company. 

The following terms may be useful in understanding this booklet. These definitions are

simplified and apply to the information discussed in this booklet. 

IV Glossary
26

Guaranteed Benefits – The amount of

pension benefits insured by PBGC.

Joint and Survivor Annuity – An annuity

that pays benefits over the recipient’s

lifetime and over the lifetime of the person

named as beneficiary.

Life Expectancy – The number of years a

person is expected to live, on average, after a

given age.

Lump Sum – A form of benefit payment in

which the entire benefit is paid at one time.

Normal Retirement Age – The age at

which a participant can retire under the

plan and receive a full pension benefit. In

most cases, the normal retirement age will

not be greater than 65 years of age.

Participant – A member of a pension plan.

A participant is said to participate in or to

be covered by the plan.

PBGC Model Separate Interest QDRO –

The PBGC Model Separate Interest QDRO

divides the value of the participant’s

benefits into two separate parts — one for

the participant and one for the alternate

payee.

PBGC Model Shared Payment QDRO –

The PBGC Model Shared Payment QDRO

gives the alternate payee a portion of the

participant’s benefit payments under the

plan during the participant’s lifetime. 

In other words, the participant and the

alternate payee share the payments.

Plan Administrator – The person or

persons who administer the plan. If the

name of the administrator is not in the plan

document, the employer is considered to be

the plan administrator.

Preretirement Survivor Annuity – The

form of QPSA paid by PBGC.

Qualified Domestic Relations Order

(QDRO) – A QDRO is a domestic

relations order that gives an alternate payee

the right to receive all or a portion of the

benefits payable to a participant under the

plan, and the PBGC determines that the

order meets certain other legal requirements

(with respect to the information and

benefits involved).

Qualified Joint and Survivor Annuity

(QJSA) – A QJSA is a joint and survivor

annuity where (1) the participant receives a

definite amount of money at regular

intervals for life, and (2) after the

participant dies, the surviving spouse (that

is, the spouse to whom the participant was

married at the time the QJSA began, or the

former spouse who is treated by a QDRO

as married to the participant at the time the

QJSA began) receives a definite amount of

money (not less than 50% or more than

100% of the participant’s amount) at

regular intervals for life.
27

Qualified Preretirement Survivor

Annuity (QPSA) – A QPSA is an annuity

provided to a surviving spouse when a vested participant dies before receiving

payment of his or her benefit. The annuity

is for the life of the surviving spouse, is

calculated based on the benefit that had

been earned when the participant died, and generally is equal to the survivor’s portion

of the QJSA.

Single Life Annuity – An annuity that

pays benefits over the recipient’s lifetime.

Once the recipient dies, there are no further

annuity payments.

Spouse – Husband or wife as determined

under applicable state law. A QDRO can

provide that the participant’s former spouse

be treated as the participant’s spouse.

Spousal Consent – A spouse’s agreement

to allow the participant to waive the QPSA

or elect a form of benefit other than a

QJSA.

Survivor Benefit – The benefit a survivor receives after the participant dies. Temporary Life Annuity – An annuity

that pays benefits over the shorter of the recipient’s life or a specified period. Value – The actuarially estimated amount

needed at a point in time to provide

monthly benefits in the future. Value

depends on the amount of the monthly

benefit payment, when the benefit

payments start and stop, age(s) of the recipient(s), mortality assumptions, and

interest assumptions. Also referred to as

“present value” or “actuarial present value.”
28

Defined Benefit Pension Plans

There are two basic types of pension

plans: defined benefit plans and defined

contribution plans. PBGC insures benefits

in most private-sector defined benefit plans.

PBGC does not insure benefits in defined

contribution plans, such as 401(k) plans. 

A defined benefit plan promises each

participant a specified benefit at retirement.

The benefit usually is based on a formula

such as the number of years a participant

has worked for a company and/or the

participant’s salary for the last few years of

work.

Defined benefit plans may pay

retirement benefits in a variety of ways.

The most common form of benefit

payment is an annuity. Normally, annuity

payments are paid over the participant’s life,

or over the lives of the participant and a

beneficiary.

A participant will automatically receive

his or her benefit in the form of an annuity

unless the participant chooses (with spousal

consent, if married) a different form of

payment. An unmarried participant usually

will receive an annuity for his or her life. 

A married participant usually will receive a

qualified joint and survivor annuity (QJSA),

unless the participant has waived it with

spousal consent.

If a married participant dies after

starting to receive retirement benefits, the

participant’s spouse will receive the

Appendix A — Defined Benefit Pension Plans and 

PBGC Benefit Rules

survivor portion of the QJSA, unless the

participant has waived the QJSA with

spousal consent. If a married participant

dies before starting to receive retirement

benefits, the participant’s spouse will

receive a qualified preretirement survivor

annuity (QPSA), unless the participant has

waived the QPSA with spousal consent.

A plan may provide that it will

distribute a participant’s benefit

immediately as a lump sum without the

participant’s election (or the participant’s

spouse’s consent) if the value of the lump

sum is $5,000 or less.

Many defined benefit plans offer

participants a choice of times at which they

may retire — early, normal, or late

retirement. The date a participant chooses

to retire usually will affect the amount of

pension benefits the participant receives. In

most plans, the longer a participant waits to

start receiving benefits, the larger the

benefit payments will be.

PBGC Benefit Rules

PBGC guarantees most, but not all,

pension benefits in plans that it insures.

PBGC does not guarantee nonpension

benefits, such as most death benefits (but

PBGC does pay the plan’s QPSA benefit).

PBGC does not guarantee benefits over a

certain amount. For example, for pension

plans terminating in 2004, the maximum

amount that PBGC guarantees is $3,698.86

per month ($44,386.32 per year) for a
29

participant who starts receiving benefits at

age 65 with a single life annuity. The

maximum amount is reduced if benefits

will be paid in a form other than a single

life annuity. This maximum amount also is reduced (increased) for a retiree who is younger (older) than age 65 when the plan terminates and for participants and

beneficiaries who begin receiving benefit

payments after the plan terminates, but

before (after) reaching age 65. (The

maximum guaranteed amount is not reduced for participants who retire early

with a disability.) In addition, PBGC’s

guarantee may be limited for supplemental

benefits and benefit increases resulting from

plan amendments within five years before

the plan terminates. PBGC may pay more

than the guaranteed amounts if the plan has

enough assets or as a result of PBGC recoveries from employers. For participants who have started receiving benefit payments or have properly

chosen a benefit form before their plan terminates, PBGC generally will pay

benefits in the form they had chosen. For

participants who have not started to receive

benefits or have not chosen a benefit form

at the time their plan terminates, PBGC generally will pay benefits in the plan’s

automatic form, generally a single life

annuity for an unmarried participant (or 

a married participant who has obtained

spousal consent) and a qualified joint and

survivor annuity for a married participant.

PBGC will pay a lump sum if the value of

the benefit is $5,000 or less at plan termination. 
30

While this booklet deals with QDROs

issued after PBGC becomes trustee of a

plan, PBGC also receives and administers

QDROs in two other situations: (i) where

PBGC becomes trustee of a plan that is

already paying benefits pursuant to a

QDRO and (ii) where PBGC becomes

trustee of a plan that has a QDRO already

approved by the plan administrator but

payments under the QDRO will not begin

until sometime in the future.

When PBGC becomes trustee of a plan

that has QDROs already approved by the

plan administrator, PBGC reviews the

QDROs to see if there is anything in the

QDROs that would make them no longer

qualified under its rules. If any issues arise,

PBGC communicates with the parties to

the QDRO.

Because PBGC guarantees may not cover

a participant’s full pension benefit, a

participant’s benefit in some cases may be

reduced after PBGC takes over a plan. This

can reduce benefits payable to one or both

parties under the QDRO. PBGC will not

treat the order as not qualified solely

because benefits paid by PBGC require

reduction of the participant’s and/or the

alternate payee’s benefit. PBGC will apply

Appendix B — QDROs Issued Before PBGC Becomes Trustee

the reduction rules here (assuming the

QDRO is silent) in the same manner as it

applies the reduction rules to QDROs that

are issued after PBGC becomes trustee. 

For example, if a QDRO awarded a fixed

percentage of the participant’s benefit to the

alternate payee, the benefits payable to both

the participant and the alternate payee

would be reduced to reflect PBGC’s

guarantee limitations. On the other hand, 

if a QDRO awarded a fixed dollar amount

of the participant’s benefit to the alternate

payee, the participant’s benefit would be

reduced first to reflect PBGC’s guarantee

limitations. The fixed dollar amount

awarded to the alternate payee would be

reduced only if the total decrease to be

made exceeded the participant’s benefit. 

If the parties want a different result, the

QDRO (or an amended QDRO) should

state the appropriate way to apply the

reductions.

PBGC guarantee limitations apply to

QDROs issued before PBGC becomes

trustee, but PBGC benefit form limitations

apply to the alternate payee’s benefit

payments or elections under these pretrusteeship QDROs only where the QDRO

was qualified after trusteeship. 
31

Pension benefits are taxable when they

are paid to the participant or, in some cases,

to the alternate payee. Internal Revenue

Service Publication 575, Pension and

Annuity Income, explains these rules. A

local IRS office will be able to provide this

publication, or it may be obtained from

IRS’s website at www.irs.gov or by calling

1-800-TAX FORM.

Benefit payments are taxable to the plan

participant, except for payments made

under a QDRO directly to an alternate

payee who is a spouse or former spouse.

This means, for example, that the

participant is taxed on payments under a

QDRO to a participant’s children. It also

means that payments made other than

directly to the spouse or former spouse (for

example, to the participant for the former

spouse) are taxed to the participant.

In some cases participants have made

their own contributions to their plan.

When pension benefits are paid, a portion

of each benefit payment is a return of some

of these contributions. Because these

contributions were already taxed before

they were contributed to the plan, they 

will not be taxed again when they are paid

out from the plan. The tax law provides

detailed rules for determining what portion

of each payment is a tax-free return of the

participant’s contributions.

There is generally an additional 10 percent

tax on non-annuity payments that are made

before age 59 1

/2. However, this 10 percent

tax does not apply to payments made to an

alternate payee under a QDRO. There are

special rules regarding rollovers of amounts

paid to alternate payees.

Section 401(a)(9) of the Code specifies 

the date by which distributions must start.

Question and Answer 6 of the Treasury

regulation section 1.401(a)(9)-8 addresses

how the required minimum distribution

rules of section 401(a)(9) of the Code apply

to the separate interest of an alternate payee.

The regulation limits the period over which

benefits may be paid with respect to the

alternate payee’s separate interest, thereby

limiting what survivor benefits may be paid.

Appendix C — QDRO Tax Rules

The following information is not intended to be tax advice. Any questions on tax matters

should be directed to a tax advisor or the IRS.
32

Notes
For information about a pension plan that PBGC has

trusteed, benefit information with respect to a

participant in such a plan, or information about Qualified

Domestic Relations Orders, call PBGC’s Customer

Service Center, 1-800-400-PBGC, or write to PBGC

QDRO Coordinator, P.O. Box 151750, Alexandria, VA

22315-1750.

To submit a domestic relations order to PBGC (or a

draft order for a preliminary, informal review), send it to

the PBGC QDRO Coordinator, P.O. Box 151750,

Alexandria, VA 22315-1750.

PRIVACY ACT NOTICE

PBGC is giving you this notice (whether you are a participant or an alternate payee) pursuant to the

Privacy Act of 1974, as amended, 5 U.S.C. § 552a (1994), as part of a collection of information from you

related to a qualified domestic relations order. PBGC uses the information collected to determine whether

an alternate payee is entitled to a portion (or all) of the participant’s benefit, and to make appropriate

payments. The Social Security Numbers provided are used by PBGC to identify the participant’s and the

alternate payee’s records within PBGC, to report income for tax purposes, and to respond to lawful requests

for information from other individuals and entities. Your response is voluntary (although a court may

require you to give the PBGC some or all of this information). However, PBGC generally cannot pay any

portion of the benefit of a living participant to someone else, except as provided in a qualified domestic

relations order. Failure to provide information to the PBGC including a Social Security Number may delay

or prevent the PBGC from paying a benefit to an alternate payee.

PBGC may release information about you to other individuals and entities when necessary and

appropriate under the Privacy Act, including: to third parties to make benefit payments to you; to a company

that was responsible for the pension plan or to entities related to that company; to a labor organization that

represents you; to obtain information from the Federal Aviation Administration relevant to a pilot or former

pilot’s eligibility for a disability benefit; to obtain your address from other sources when PBGC does not

have a current or valid address for you; and to a limited extent to your spouse, former spouse, child, or other

dependent when such individual may be entitled to benefits from PBGC. 

PBGC may also release information about you to appropriate law enforcement agencies when PBGC

becomes aware of a possible violation of civil or criminal law. If PBGC, an employee of PBGC, the United

States, or another agency of the United States, is involved in litigation, PBGC may provide relevant

information about you to a court or other adjudicative body or to the Department of Justice when it

represents PBGC. PBGC may also provide information about you to the Office of Management and Budget

in connection with review of private relief legislation or to a Congressional office in response to an inquiry

that office makes about you at your request. 

PBGC publishes notices in the Federal Register that describe in more detail when information about you

may be made available to others. A copy of the most recent Federal Register notice may be obtained from

PBGC’s Customer Service Center by calling 1-800-400-7242. If you use a TTY/TDD, call toll-free 1-800-877-

8339 and give the communications assistant PBGC’s telephone number. PBGC’s authority to collect

information from you, including your Social Security Number, is derived from 29 U.S.C. §§ 1055, 1056(d)(3),

1302, 1321, 1322, 1322a, 1341 and 1350 (1994). 
Pension Benefit Guaranty Corporation

1200 K Street, NW

Washington,DC 20005-4026

www.pbgc.gov

PBGC Publication 1005

December 2003