IPERS QDRO Instruction Packet

IPERS QDROInstruction PacketQDRO Administrator7401 Register DriveP.O. Box 9117Des Moines, Iowa 50306-9117515-281-7623 (phone)800-622-3849 x 17623 (toll-free)515-281-0045 (fax)info@ipers.org

Table of ContentsIntroduction………………………………………………………………………...………………Page 3General Comments…………………………………………………………………………….Page 4-5QDRO Checklist…………………………………………………………..……………………..Page 6-7An IPERS QDRO MUST…………………………………….…………………………….Page 6An IPERS QDRO MAY………………………………………………………………….Page 6-7An IPERS QDRO CANNOT……………………...………………………………………Page 7Model IPERS QDRO…………………………………………………………………………..Page 8-11Mandatory Provisions Paragraphs 1 and 2……………………………………...………Page 8Mandatory Provisions Paragraphs 3, 4, 5, 6, 7, and 8……….……………………...Page 9-10Mandatory Provisions Paragraphs 8, 9, 10, and 11……………………………………Page 10Signature Blocks…………………………………………..………………………………Page 11Administrative Rule Compliance for QDROs form……………………..……………………Page 12Confidential Information form………………………….………………………………………Page 13Drafting Samples…………………………………………..…………………………………Page 14-21Paragraph 3: Straight Percentage Method…………………..…………………………Page 14Paragraph 3: Service Factor Percentage Method…………..………………………Page 14-15Paragraph 3: Sum Certain Method…………………………...……………..………Page 15-16Paragraph 4: Period of Payment…………………………….…………………………..Page 17Optional Paragraphs 5A-5F……………………………….…………………………Page 18-21Dividends/Cost-of-Living Increases……………...………...…………………Page 18Successor Alternate Payee…………………………..…………………………..Page 18Form of Benefit……………………………………..…………………………….Page 19No Refund…………………………………………….………………………….Page 19Designation of Beneficiary―Preretirement Death Benefits…...……………..Page 19Designation of Beneficiary―Postretirement Death Benefits….……………..Page 20Designation of Contingent Annuitant―Option 4…………………………….Page 20Designation of Contingent Annuitant―Option 6…………………………….Page 21Effective May 8, 20132

IntroductionYou are likely reading this packet because you are an IPERS Member or the spouse of an IPERSMember contemplating dissolution or you are an attorney representing an IPERS Member orspouse in a dissolution. If you are the IPERS Member or spouse, this packet is not intended aslegal advice and should not replace consultation with an attorney. Specific questions relating toyour dissolution and the equitable split of marital assets and your IPERS pension under theshared account method should be directed to an attorney.The following guidelines are to be used when drafting a Qualified Domestic Relations Order(QDRO), that divides the marital property of opposite-gender spouses, or an AdministrableDomestic Relations Order (ADRO), that divides the marital property of same-gender spouses.The guidelines comply with Iowa Code § 97B.39 and Iowa Administrative Code 495 IAC 16(97B). The terms QDRO or Order are used in the guidelines, but also apply to ADROs.Drafters are encouraged to visit IPERS’ website for materials that may be of particularimportance to their specific client’s needs. IPERS offers a brochure, Divorce and IPERS Benefits,specifically tailored to dissolutions involving IPERS members. The brochure is available at:https://www.ipers.org/publications/members/pdf/brochures/qdro.pdf.SUBMITTING A DRAFT ORDERIPERS will not review a proposed/draft Order that is not accompanied by:(√)________Administrative Rule Compliance for QDROs form (for each Draft and subsequent Draft)Confidential Information formSUBMITTING A FINAL ORDERIf an Order is final, and has been signed by a judge and file-stamped by the court, IPERS willnot review a final Order for qualification that is not accompanied by:(√)________Confidential Information form (if not previously provided with a draft Order)Birth certificate for the Alternate Payee, if the QDRO mandates the Member to electOption 4 or 6 at retirement and name the Alternate Payee as contingent annuitant.Effective May 8, 20133

General CommentsIPERS is a governmental pension plan. IPERS is not governed by the provisions of the Employee Retirement IncomeSecurity Act of 1974 (ERISA) or most of the provisions of the Internal RevenueCode (IRC) that govern the division of qualified plan assets. Although this packet uses the terms Alternate Payee and Qualified DomesticRelations Order, drafters should not confuse those with ERISA or IRC concepts.IPERS is a defined benefit plan, not a defined contribution plan like a 401(k). IPERS benefitsare determined by a formula. Do not submit Orders that treat Member’s IPERS interestslike defined contribution plans. A report of Member and employer contributions andinterest does not necessarily represent the “value” of a Member’s account.IPERS will not prepare lump-sum present value calculations representing the “value” ofa Member’s account. It is up to the parties or the judge to determine. A qualifiedcertified public accountant or actuary may prepare this type of calculation for you.IPERS suggests Members and their Attorneys generate and review a Benefit Statement,Pension Estimate or Your Transaction Details, by creating an on-line account here:https://www.ipers.org/login.htmlEffective May 8, 20134

If a Member is still legally married, the Member must obtain written consent from thespouse to provide and updated Enrollment/Beneficiary Designation form to IPERS.http://www.ipers.org/forms/members/beneficiaryform.pdfIPERS accepts only a shared payment method for dividing benefits. The Member’s IPERS account remains whole. Payments to the Member and Alternate Payee are split at the same time. The Alternate Payee cannot receive any payment until the Member (or theMember’s beneficiaries) receives payment under a trigger event (qualifyingdistribution(s) of benefits made with respect to a Member).There are three ways of dividing a Member’s gross benefits payable at the date theMember begins receiving benefits (the date of distribution), under the shared paymentmethod (See Drafting Samples―Paragraph 3): a straight percentage; a service factor percentage method; or a specific dollar amount (sum certain).A preretirement QDRO may award an Alternate Payee a share of benefit paymentsrelated to any or all of the following trigger events: Member applies for a monthly benefit (Pension) Member applies for a lump-sum benefit (Refund or an AE is payable) Preretirement lump-sum death benefits become payable Postretirement death benefits become payableA postretirement QDRO may only award an Alternate Payee a share of benefitpayments related to a monthly benefit (Pension) and a few select Optional provisions.NOTE: If a Member has retired and is receiving monthly distributions, the Orderwill be rejected if it contains Optional Paragraphs C, D, E, or F.For Members who are retired and then reemployed in new IPERS-covered employment,there may be additional benefits to which the Member and Alternate Payee may (or maynot) be entitled. This provision is outlined in Drafting Samples―Paragraph 3.IPERS may discuss questions of a general nature. However, a properly completedIPERS Authorization for Release of Information form must be on file with IPERS beforeconfidential information can be shared with anyone other than the Member:https://www.ipers.org/forms/members/authorizationforreleaseofinformation.pdfParagraph 7 states that the Alternate Payee may request information from the Member’saccount. IPERS will only provide copies of information dated after the QDRO isqualified and that has already been provided to the Member, as archived in the account.Effective May 8, 20135

QDRO ChecklistAn IPERS QDROs MUST:(√)____________________________Be double-spaced and in 12-pt. font.Contain current mailing addresses for the Member and Alternate Payee (andSuccessor Alternate Payee(s), if named in the Order).Identify IPERS and its correct mailing address as the Plan.State that the Order is a marital property settlement.State the exact percentage or exact dollar amount of the Member’s gross monthlyor gross lump-sum payment, or method for determining said percentage ordollar amount, payable to the Alternate Payee at the time that a qualifyingdistribution begins. (See Drafting Samples―Paragraph 3.)State the period of time that monthly payments are to be made to the AlternatePayee, if the qualifying distribution event is a monthly pension payment to theMember. (See Drafting Samples―Paragraph 4.)State that payments will begin only at the time when a distribution from theMember’s account is made (trigger event). (See Drafting Samples―Paragraph 5.)____ Be signed by the judge and filed with the clerk of court, or conformed inaccordance with local court rules (NOTE: IPERS will accept a photocopy or faxedcopy of a final, file-stamped Order–―the final Order does not need to be certified).____Be accompanied by the appropriate documents as indicated in the Introduction.An IPERS QDRO MAY:(√)________Award a share of dividends to the Alternate Payee. (See Optional Paragraph 5A.)Name Successor Alternate Payee(s). If minor children are involved, a trusteemay be named as Successor Alternate Payee. (See Optional Paragraph 5B.)Effective May 8, 20136

____Require the Member’s lifetime benefits to be paid under a particular option. (SeeOptional Paragraph 5C and the following link detailing IPERS’ six Options:http://www.ipers.org/publications/members/pdf/brochures/retirement.pdf____Bar the Member from taking a refund without the consent of the Alternate Payee.(See Optional Paragraph 5D.)____ Require the Member to name the Alternate Payee as a beneficiary of theMember’s death benefits. (See Optional Paragraphs 5E and 5F.)____Require a portion of the Member’s retired/reemployment benefit to be paid tothe Alternate Payee. (See Drafting Samples―Paragraph 3.)NOTE: For Optional Paragraphs 5E and 5F to be operative, drafters should considerinclude Optional Paragraph 5C, mandating the Member make an Option selection thatincludes death benefits. If Paragraph 5C is not included in the Order, even if 5E and 5Fare included, the Member may be free to elect any Option at retirement. Options 1, 2, and 5 provide various types of lump sum or monthly death benefitsthat may be subdivided among beneficiaries; Options 4 and 6 provide a joint and survivor annuity death benefit for a namedcontingent annuitant and cannot be subdivided; Option 3 provides no death benefit.An IPERS QDRO CANNOT require IPERS to:(√)________________________Maintain separate accounts for the Member and Alternate Payee.NOTE: Drafting Attorneys please clearly explain this to your client(s). An AlternatePayee does not have access to his or her share of the Member’s payments until thereis a qualifying distribution event.Pay any amounts to attorneys, financial institutions (except as part of a rollover),or others, or make payments to heirs per stirpes.Provide a type or form of benefit or Option not already established.Pay increased benefits (determined on the basis of actuarial value).Allow this Order to take precedence over any QDRO previously accepted byIPERS involving another Alternate Payee.Divide a Member’s death benefit if the Member is already receiving monthlypension benefits.Effective May 8, 20137

to provide any type or form of benefits, or any option, not otherwiseprovided under IPERS; orto provide benefits to an Alternate Payee which are required to be paid toanother Alternate Payee under another Order previously determined to bea Qualified Domestic Relations Order.9. The Court directs that a copy of this Order, and a completed copy of theConfidential Information form, containing the Member’s and the Alternate Payee’s (andany Successor Alternate Payees’) current mailing addresses, full social securitynumbers, and dates of birth be provided to IPERS. Within a reasonable time afterreceiving a copy of this Order, IPERS shall determine whether the Order is acceptedand shall notify attorneys for the Member and the Alternate Payee of suchdetermination.10. The Member, the Alternate Payee, and the Court intend this Order to be aQualified Domestic Relations Order as defined in Internal Revenue Code § 414(p)(11),Iowa Code § 97B.39, and the administrative rules.11. The Court retains jurisdiction to amend this Order, but only for the purposeof establishing or maintaining its qualification as a Qualified Domestic Relations Orderas defined in Internal Revenue Code § 414(p)(11), Iowa Code § 97B.39, and theadministrative rules.Effective May 8, 201310

Dated ___________________________________________________________Judge, _______________ Judicial DistrictApproved as to form:___________________________Attorney for Petitioner___________________________Attorney for RespondentCopies to:IPERSQDRO Administrator7401 Register DriveP.O. Box 9117Des Moines IA 50306-9117NameAddressCity, State ZIPAttorney for PetitionerNameAddressCity, State ZIPAttorney for RespondentEffective May 8, 201311

Drafting SamplesParagraph 3:Sample A: Straight Percentage Method3. IPERS is directed to pay benefits to the Alternate Payee as a marital propertysettlement under the following formula: (Insert a number) percent of the gross monthlyor lump-sum benefit payable at the date the Member begins receiving benefits. Thispercentage (shall or shall not) be applied to benefits accrued by the Member duringpostretirement periods of employment.Sample B: Service Factor Percentage Method3. IPERS is directed to pay benefits to the Alternate Payee as a marital propertysettlement under the following formula: (Insert a number) percent of the gross monthlyor lump-sum benefit payable at the date the Member begins receiving benefits,multiplied by the “service factor.” The numerator of the service factor is: (Insert one ofthe numerator types below). The denominator is the Member’s total quarters of servicecovered by IPERS and used in calculating the Member’s benefit. The service factorpercentage method (shall or shall not) be applied to benefits accrued by the Memberduring postretirement periods of reemployment.Effective May 8, 201314

Numerator Types:The numerator of the service factor is: # quarters.Example of how IPERS will calculate the future Alternate Payee payment:_____%X# QuartersTotal quarters of IPERS-coveredemployment used in calculating benefits-OR-The numerator of the service factor is: the number of quarters covered during themarriage period of MM/DD/YYYY trough MM/DD/YYYY.Example of how IPERS will calculate the future Alternate Payee payment:_____ %XQuarters of IPERS-coveredEmployment during the marriage periodTotal quarters of IPERS-coveredemployment used in calculating benefitsNOTE: The “service factor” percentage method reflects the Iowa Supreme Court’s decision in Inre: Marriage of Benson, 545 N.W.2d 252 (Iowa 1996), a case drafters should review regarding afractional reduction (reduced for the marital period), applied to a percentage of a future award.Sample C: Sum Certain Method3. IPERS is directed to pay benefits to the Alternate Payee as a marital propertysettlement under the following formula: $ (Insert amount) of the Member’s gross lumpsumpayment at the time the Member begins receiving benefits if benefits are paid as aEffective May 8, 201315

lump-sum benefit, or (Insert $) OR (#) percent of the Member’s gross monthly paymentat the time the Member begins receiving benefits if benefits are paid as a monthlyallowance. The total amount payable by IPERS to the Alternate Payee under this Order,including amounts expressly directed in this Order to be paid from monthly payments,refunds, death benefits, and dividends, as applicable, shall be aggregated and shall notexceed the amount of the marital property award pertaining to the Member’s IPERSaccount. The total dollar amount payable by IPERS to the Alternate Payee (shall or shallnot) include amounts payable from benefits accrued by the Member duringpostretirement periods of employment.If the Alternate Payee SHALL receive a share of the Member’s benefits accruedduring postretirement periods of reemployment under any of the above sharedpayment methods for a gross monthly or lump-sum payment, AND the alternatePayee has been awarded optional benefits, such as dividends or death benefits underoptional paragraphs 5A-5F, you MAY add the following sentence, if applicable:The Alternate Payee’s share shall be applied to all payments related to any benefits,including dividends and death benefits, and shall continue for the same period andbegin at the same time as provided in Paragraphs 4 and if awarded in optionalparagraphs in the Order.Effective May 8, 201316

Paragraph 4:4. If the Member receives a monthly benefit, IPERS will pay benefits to theAlternate Payee for the following period: (Insert an applicable period from below).Life of the Member.-OR-Until the sum certain specified in this Order has been paid.-OR-For the joint life of the Member and Alternate Payee (Contingent Annuitant) asallowed under an Option 4 or 6 joint and survivor annuity.-OR-Other:______________________________________________________________.NOTE: If “Other” is chosen, please state time period or method for determiningthe time period of payments. “Life of the Alternate Payee” or “Until the AlternatePayee remarries” is not acceptable.Effective May 8, 201317

Optional Paragraphs 5A-5F:A. Dividends/Cost-of-Living IncreasesIf IPERS pays a dividend, a cost-of-living increase, or any other postretirementbenefit increase to the Member, the Alternate Payee shall receive a share of saidincrease. The Alternate Payee’s share of such increase will be in the same proportionas determined in Paragraph 3.-OR-If IPERS pays a dividend, a cost-of-living increase, or any other postretirementbenefit increase to the Member, the Alternate Payee shall receive a share of saidincrease. The Alternate Payee’s share of such increase shall be determined on a prorata basis.B. Successor Alternate PayeeIf the Alternate Payee dies before the Member, the amounts that would have been payableto the Alternate Payee under this Order, except amounts payable to the Alternate Payee as acontingent annuitant, shall be paid to (insert name of Successor Alternate Payee), whosecurrent mailing address is (insert Address of Successor Alternate Payee).NOTE 1: A Successor Alternate Payee must be a person (or people), not an estate or trust.Drafters may list more than one Successor Alternate Payee, in addition to a Trustee if theSuccessors are minor children.NOTE 2: Drafters must provide full name(s), address(es), date(s) of birth, and socialsecurity number(s) on the Confidential Information form.Effective May 8, 201318

C. Form of BenefitThe Member shall select IPERS Option ____ in his or her application for retirementbenefits.NOTE 1: http://www.ipers.org/publications/members/pdf/brochures/retirement.pdfNOTE 2: Without this Paragraph in the Order, postretirement death benefit paragraphsmay or may not be operable at the time they are paid out, as the Member may be free tochoose any Option choice at retirement.D. No RefundThe Member shall be barred from requesting a refund without the consent of theAlternate Payee. If the Member applies for a refund, a consent form will be sent tothe Alternate Payee at the address of record at IPERS. The completed consent formmust be received by IPERS within 60 days. If returned undeliverable or no responseis received, the Alternate Payee’s refund amount will be payable to the Member.E. Designation of Beneficiary—Preretirement Death BenefitsThe Alternate Payee shall be deemed to be a designated beneficiary with respect topreretirement death benefits under IPERS. The Alternate Payee shall receive ____(percentage of preretirement death benefit awarded, if order specifies a percentage method)percent OR $________ (dollar amount of preretirement death benefit awarded, if orderspecifies dollar amount method) of the Member’s death benefit. This designation shallbe irrevocable unless modified or revoked in a subsequent Qualified DomesticRelations Order.Effective May 8, 201319

F. Beneficiary—Postretirement Death BenefitsThe Member shall name the Alternate Payee as a designated beneficiary with respectto postretirement death benefits. The Alternate Payee shall receive ______ percent(percentage of postretirement death benefit awarded, if order specifies a percentage method)OR $______ (dollar amount of postretirement death benefit awarded, if order specifies dollaramount method) of the Member’s death benefit. This designation shall be irrevocableunless modified or revoked in a subsequent Qualified Domestic Relations Order.Note 1: This paragraph would be applicable if the Member elected or was mandated toelect IPERS Options 1, 2 or 5 at retirement. (See Optional Paragraph C).Note 2: Drafters may use the language “the same percentage as awarded in Paragraph 3of this Order”, if applicable.-OR-Designation of Contingent Annuitant—Postretirement Death BenefitsThe Member shall name the Alternate Payee as the Member’s contingent annuitantunder IPERS Option 4. The Alternate Payee shall receive a (see below) percent jointand survivor death benefit payment under this Option. The Member shall not beentitled to name anyone other than the Alternate Payee as the contingent annuitant.This designation shall be irrevocable unless modified or revoked in a subsequentQualified Domestic Relations Order. Notwithstanding subsequent Orders, thisdesignation shall be irrevocable once the Member begins receiving IPERS benefits.Effective May 8, 201320

-OR-Designation of Contingent Annuitant—Postretirement Death BenefitsThe Member shall name the Alternate Payee as the Member’s contingent annuitantunder IPERS Option 6. The Alternate Payee shall receive a (see below) percent jointand survivor death benefit payment under this Option. The Member shall not beentitled to name anyone other than the Alternate Payee as the contingent annuitant.Notwithstanding the foregoing, if the Member retires and the Alternate Payee diesbefore the Member, and the Order provides for a Successor Alternate Payee, theSuccessor Alternate Payee shall receive ____ percent (percentage of postretirement deathbenefit awarded, if order specifies a percentage method) OR $____ (dollar amount ofpostretirement death benefit awarded, if order specifies dollar amount method) of any lumpsumdeath benefit payable (the death benefit that would be payable if the Memberhad selected Option 2 at retirement).NOTE 1: If the QDRO requires the Member to select Option 4 or Option 6 and name theAlternate Payee as contingent annuitant, per administrative rule 495―16.2(3)”k”, a copyof the Alternate Payee’s birth certificate must be provided before a QDRO can bequalified.NOTE 2: The available percentages under Options 4 or 6 are 25, 50, 75 or 100% of themember’s monthly benefit. Per administrative rule 495―16.2(3)”k”, IPERS will not acceptor administer an Order that attempts to use wording that leaves the percentage choiceundetermined or up to the election of the Member at retirement. Drafters must include amandated percentage the Member selects at retirement form the percentages listed above.Effective May 8, 201321

Please do not hesitate to contact IPERS’ QDROAdministrator with any questions.515-281-7623 (phone)800-622-3849 x 17623 (toll-free)515-281-0045 (fax)info@ipers.orgEffective May 8, 201322