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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.
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.
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.
A 403(b) plan is a retirement savings plan available for public education organizations, certain non-profits, certain medical/hospital organizations and self-employed ministers. A 403(b) plan is retirement account whereby the employer, the employee or both make contributions into an account established on behalf of the employee. Such funds can be invested, and upon retirement, the employee receives either a lump sum payment of the amount held in the account or such balance is converted to a monthly annuity payable for the lifetime of the employee. Because the contributions are defined or "known" it is considered to be a defined contribution pension plan.
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.
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.
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.
A TIAA 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
A deferred compensation plan is a retirement plan whereby the employer, a public institution like a state or local government, public school system or healthcare provider, and employee or both make contributions into an individual account established on behalf of the employee. Such funds can be invested, and upon retirement, the employee receives either a lump sum payment of the amount held in the account or such balance is converted to a monthly annuity payable for the lifetime of the employee. These plans do not fall under the rules and regulations of ERISA (Employee Retirement Income Security Act) as would plans of this type offered in the private sector.
