Defined Contribution Plans (ERISA) A Defined Contribution plan is a pension plan which has an account specified for the individual employee where a defined amount is being contributed to the plan by the individual, the employer or both. Examples of this type of plan are 401(k), 401(a), Savings Plans and Profit Sharing Plans.

An Alternate Payee can be awarded a portion of the Employee’s account pursuant to a QDRO. The Plan will establish a separate account for the Alternate Payee, and offer the Alternate Payee the same investment opportunities that are available for other participants. If the Alternate Payee chooses, it is usually possible to transfer the funds awarded to an IRA or other tax qualified account of his/her choice. By using a QDRO to award funds from this type of plan, early withdrawal penalties are avoided, and the Alternate Payee will be held responsible for the taxes on any distribution he/she receives from the Plan.

Under most plans, it is possible to award the Alternate Payee a portion of the Employee’s account balance as of a specific date (i.e. 50% of the account balance as of July 7, 2000), plus any investment gains or losses attributable thereon from that date until the date the Alternate Payee receives a distribution from the Plan.

Since this type of plan affords for an Alternate Payee to receive an immediate lump sum distribution, the terms of the QDRO are much simpler than the provisions contained in QDROs for other types of plans.

Your Documents Traditional Plan .................................. Learn More Learn More | Start Now Start Now

A traditional plan is a retirement plan whereby the employer, employee or both make contributions towards an individual account established on behalf of the employee. Such funds can be invested, and upon retirement, the employee will receive either a lump sum payment of the amount held in the account or such balance will be converted to a monthly annuity payable for the lifetime of the employee. Because of the unknown nature of the plan it is considered to be a defined contribution pension plan.

Your Documents 401(k) Plan .................................. Learn More Learn More | Start Now Start Now

A 401(k) plan is a retirement plan whereby the employer, employee or both make contributions towards an individual account established on behalf of the employee. Such funds can be invested, and upon retirement, the employee will receive either a lump sum payment of the amount held in the account or such balance will be converted to a monthly annuity payable for the lifetime of the employee. Because of the unknown nature of the plan it is considered to be a defined contribution pension plan.

Your Documents Profit Sharing Plan .................................. Learn More Learn More | Start Now Start Now

A profit sharing plan is a retirement plan whereby the employer, employee or both make contributions towards an individual account established on behalf of the employee. Such funds can be invested, and upon retirement, the employee will receive either a lump sum payment of the amount held in the account or such balance will be converted to a monthly annuity payable for the lifetime of the employee. Because of the unknown nature of the plan it is considered to be a defined contribution pension plan.

Your Documents Savings Plan .................................. Learn More Learn More | Start Now Start Now

A savings plan is a retirement plan whereby the employer, employee or both make contributions towards an individual account established on behalf of the employee. Such funds can be invested, and upon retirement, the employee will receive either a lump sum payment of the amount held in the account or such balance will be converted to a monthly annuity payable for the lifetime of the employee. Because of the unknown nature of the plan it is considered to be a defined contribution pension plan.

Your Documents Individual Retirement Account (IRA) .................................. Learn More Learn More | Start Now Start Now

Under this type of plan, the individual contributes a dollar amount per year to the plan. Individual record keeping is maintained for contributions, interest and investment gains or losses.

Your Documents TIAA/CREF Plan .................................. Learn More Learn More | Start Now Start Now

A TIAA/CREF plan is a retirement plan whereby the employer, employee or both make contributions towards an individual account established on behalf of the employee. Such funds can be invested, and upon retirement, the employee will receive either a lump sum payment of the amount held in the account or such balance will be converted to a monthly annuity payable for the lifetime of the employee. Because of the unknown nature of the plan it is considered to be a defined contribution pension plan.

Understanding TIAA-CREF

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