Using a QDRO to Create a Shared Interest in a Colorado Pension Plan

Although usually the Separate Interest approach to dividing a pension plan should be used pursuant to a divorce QDRO, sometimes a Shared Interest approach should be or must be used.

The Shared Interest approach has been called the “if, as, and when received” approach.

In other words, the former spouse (Alternate Payee) who receives the QDRO benefit will a receive a portion of the plan Participant’s retirement monthly annuity only when the plan Participant receives a monthly check. In other words, there will no receipt of any retirement benefit other than a portion of each monthly annuity check.

The former spouse (Alternate Payee) who receives the QDRO portion has little or no options as to what can be done with that asset. And may receive little or nothing if the plan Participant dies “too soon.”

If the plan Participant (employee) has already retired and is receiving a monthly annuity check, then there may be no option other than the Shared Interest approach.

However, in most cases, a pension plan should be divided using the Separate Interest approach. Out of fairness to both former spouses and it saves them 7% or more of each lifetime payment.   And in accordance with the laws and policies of the equitable division of property responsibility of a court.

NOTE:  If a survivor option is available, then if the Alternate Payee pays for the survivor option, then the Alternate Payee may receive a reduced pension after the death of the Participant. The cost of the survivor interest is a reduction of at least 7% of each monthly payment for life. There is no such cost if a Separate Interest pension QDRO is used.