Petitioner's Brief on the Merits - Supreme Court of Texas

esulting QDRO must take into account any future growth on the ‘divided’ community
interest so the alternate payee does not lose any future separate property. 13
2. Defined benefit plans
Defined benefit plans are much more complicated, both from the standpoint of
drafting a QDRO and valuing the plan at the time of divorce. 14
A defined benefit plan
contractually guarantees the participant a benefit, defined by a formula, usually based on
years of service, age, and highest salary paid. 15
Consequently, there is no separate account
or cash balance subject to easy valuation if the divorce precedes retirement. 16
Rather,
because the benefit under a defined benefit plan is based on a formula, what one might think
of as the “present value” is actually the accrued benefit. The accrued benefit in a defined
benefit plan is expressed in terms of the benefit the plan participant would receive upon
attainment of normal retirement age, given the current salary and years of service at the
time of calculation. A typical formula might be:
1.25%
[multiplier]
final
(years of service –
average
any service prior to
X X = benefit
pay
date of plan eligibility)
[salary]
[credited service]
13 Id.
14 DIVIDING PENSIONS § 1.4; QDRO ANSWER BOOK Q2:1.
15 Brown, at 1137; Reiss v. Reiss, 40 S.W.3d 605, 608 n.2 (Tex. App. – Houston [1st Dist.] 2001, pet. filed); Smith v.
Smith, 22 S.W.3d 140, 148 (Tex. App. – Houston [14th Dist.] 2000, no pet.); Baw, 949 S.W.2d 768 n.3; Hatteburg, 933
S.W.2d at 531.
16 DIVIDING PENSIONS § 1.4; QDRO ANSWER BOOK Q1:37.
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