Why Can Stating a Present Value Amount in the QDRO and Separation Agreement Be a Fatal Flaw?
After both parties have stipulated to the present value of the participant’s pension benefits, it is agreed that a QDRO shall issue that will provide the nonparticipant with a portion of the participant’s pension benefits. In preparing the applicable section of the separation agreement, do not fall into the potential malpractice trap of incorporating the stipulated present value amount into the agreement if you are going to pursue a QDRO for your client. On the date of divorce, the present value of a participant’s accrued benefit under a defined benefit pension plan is merely a “snapshot” view of such value, stated in today’s dollars. The stipulated present value amount is accurate for one day only-the date used in the calculation by the pension evaluator. For example, if it is determined that the present value of John’s accrued benefit was $8840 on March 1, 2002, it will be different the following day and each day thereafter, up until his date of retirement. For this reason, the stipu
