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A Cash Balance plan is a defined benefit plan that defines the benefit in terms that are more characteristic of a defined contribution plan. In other words, a cash balance plan defines the promised benefit in terms of a stated account balance. In a typical cash balance plan, a “formula” is used to determine an employee’s benefit. A participant’s account is credited each year with a pay credit (such as 5 percent of compensation from his or her employer) and an interest credit (either a fixed rate or a variable rate that is linked to an index such as the one-year Treasury bill rate). Increases and decreases in the value of the plan’s investments do not directly affect the benefit amounts promised to participants. Thus, the investment risks and rewards on plan assets are borne solely by the employer.
ATTENTION: In the following Model Settlement Agreement, the Plaintiff is the Participant and the Defendant is the Alternate Payee. (You must insert the correct designations - Example: Plaintiff, Petitioner, Complainant, Defendant or Respondent)
View Sample Defined Benefit (Cash Balance) Agreement Language (PDF)
Plaintiff is a Participant under the [Insert Exact Name of Plan] (hereinafter referred to as Plan). Through a Qualified Domestic Relations Order “QDRO”, Defendant is hereby granted a portion of the Plaintiff’s retirement benefits under the Plan as specified below.
[Choose Option A, B, C, D, E or F]
Defendant’s Share of Opening Account Balance: The Defendant will be assigned an amount equal to [Insert % Amount] Percent of the Plaintiff’s "Opening" Account Balance under the Plan as of the Cash Balance Plan Establishment Date (date the prior plan was converted to this cash balance plan).
Option B. - Percent of the Marital Portion of the Opening Account Balance as of the Cash Balance Plan Establishment Date.
Defendant’s Share of Opening Account Balance: The Defendant will be assigned an amount equal to [Insert % Amount] Percent of the "Marital Portion" of the Plaintiff’s "Opening" Account Balance under the Plan as of the Cash Balance Plan Establishment Date (date the prior plan was converted to this cash balance plan). The Marital Portion of the Opening Account Balance shall be determined by multiplying such Opening Balance by a fraction the numerator of which is the number of months of the Plaintiff’s credited service earned under the prior plan during the marriage from [Insert Marriage Date] to the Cash Balance Plan Establishment Date, and the denominator of which is the total number of months of the Plaintiff’s credited service in the prior plan as of the Cash Balance Establishment Date.
Option C. - Percent of Opening Account Balance as of the Cash Balance Plan Establishment Date PLUS a Dollar Amount.
Defendant’s Share of Opening Account Balance: The Defendant will be assigned an amount equal to [Insert % Amount] Percent of the Plaintiff’s "Opening" Account Balance under the Plan as of the Cash Balance Plan Establishment Date (date the prior plan was converted to this cash balance plan) PLUS [Insert $ Amount].
Option D. - Percent of Opening Account Balance as of the Cash Balance Plan Establishment Date MINUS a Dollar Amount.
Defendant’s Share of Opening Account Balance: The Defendant will be assigned an amount equal to [Insert % Amount] Percent of the Plaintiff’s "Opening" Account Balance under the Plan as of the Cash Balance Plan Establishment Date (date the prior plan was converted to this cash balance plan) MINUS [Insert $ Amount].
Option E. - Percent of Opening Account Balance as of the Cash Balance Plan Establishment Date AFTER DEDUCTING a Dollar Amount.
Defendant’s Share of Opening Account Balance: After DEDUCTING [Insert $ Amount] from the Plaintiff’s "Opening" Account Balance under the Plan as of the Cash Balance Plan Establishment Date (date the prior plan was converted to this cash balance plan) the Defendant will be assigned an amount equal to [Insert % Amount] Percent of the Plaintiff’s remaining Opening Account Balance.
Option F. – Dollar Amount of the Opening Account Balance as of the Cash Balance Plan Establishment Date.
Defendant’s Share of Opening Account Balance: The Defendant will be assigned an amount equal to [Insert $ Amount] Dollars of the Plaintiff’s "Opening" Account Balance under the Plan as of the Cash Balance Plan Establishment Date (date the prior plan was converted to this cash balance plan).
[Choose Option A, B or C]
Option A. - Percent as of the Marriage End Date
Defendant’s Share of the Contributions and Interest Credits: Additionally, the Defendant shall be entitled to receive [Insert % Amount] Percent of any and all Plan Contributions and Interest Credits accumulated by the Plaintiff under the Plan from the Cash Balance Establishment Date to [Insert the Marriage End Date].
Option B. - Percent as of a Specific Date
Defendant’s Share of the Contributions and Interest Credits: Additionally, the Defendant shall be entitled to receive [Insert % Amount] Percent of any and all Plan Contributions and Interest Credits accumulated by the Plaintiff under the Plan from the Cash Balance Establishment Date to [Insert the Specific Date].
Option C. – Dollar Amount
Defendant’s Share of the Contributions and Interest Credits: Additionally, the Defendant shall be entitled to receive [Insert $ Amount] of any and all Plan Contributions and Interest Credits accumulated by the Plaintiff under the Plan after the Cash Balance Establishment Date.
Death of Defendant: If the Defendant dies before the Plaintiff starts receiving benefits, the Defendant’s award shall [choose A or B]
A. - become payable to the Defendant’s designated beneficiary (or estate). B. - revert to the Plaintiff.
Processing The Qualified Domestic Relations Order: Defendant’s Attorney will be responsible of preparing, submitting and overseeing the approval of the QDRO until its final acceptance by the plan administrator as a QDRO. It is understood that Defendant’s Attorney may employ a QDRO drafting company to assist in the preparation and submission of the Order to the plan administrator for approval as a QDRO.
[Choose Option A, or B.]
Option A. – Percent Amount
A. - Amount of Alternate Payee’s Benefit Payments: From the monthly pension benefits otherwise payable to the Plaintiff, the QDRO shall assign to Defendant an amount equal to [Insert % Amount] Percent per month commencing as soon as administratively feasible following the date the Order is approved as a Qualified Domestic Relations Order by the Plan Administrator.
Option B. – Dollar Amount
B. - Amount of Alternate Payee’s Benefit Payments: From the monthly pension benefits otherwise payable to the Plaintiff, the QDRO shall assign to Defendant an amount equal to [Insert $ Amount] Dollars per month commencing as soon as administratively feasible following the date the Order is approved as a Qualified Domestic Relations Order by the Plan Administrator.
Death of Defendant: If the Defendant dies before the Plaintiff and the Defendant has not started to receive benefits, the Defendant award shall [choose A or B]
A. - become payable to the Defendant’s designated beneficiary (or estate). [Some Plans do not allow this under their guidelines] B. - revert to the Plaintiff.
Option A. - Percent of the Total Account Balance
Amount of Defendant’s Benefit: The Order shall assign to the Defendant an amount equal to [Insert % Amount] Percent of the Plaintiff’s Total Account Balance accumulated under the Plan as of [Insert the Marriage End Date or a Specific Date]. Further, the Defendant shall be entitled to any "Interest Credits" associated with the Defendant’s share of the total account balance from [Insert the Marriage End Date or a Specific Date] until the date of distribution.
Option B. - Percent of the Marital Portion of the Total Account Balance.
Amount of Defendant’s Benefit: The Defendant will be assigned an amount equal to [Insert % Amount] Percent of the "Marital Portion" of the Plaintiff’s Total Account Balance accumulated under the Plan as of [Insert the Marriage End Date]. The Marital Portion shall be determined by multiplying such Total Account Balance by a fraction the numerator of which is the number of months of the Plaintiff’s credited service earned during the marriage from [Insert Plan Start Date or Marriage Date (whichever is the later date)] to [Insert the Marriage End date]. Further, the Defendant shall be entitled to any "Interest Credits" associated with the Defendant’s share of the total account balance from [Insert the Marriage End Date or a Specific Date] until the date of distribution.
Option C. - Percent of the Total Account Balance PLUS a Dollar Amount.
Amount of Defendant’s Benefit: The Order shall assign to the Defendant an amount equal to [Insert % Amount] Percent of the Plaintiff’s Total Account Balance accumulated under the Plan as of [Insert the Marriage End Date or a Specific Date] PLUS [Insert $ Amount]. Further, the Defendant shall be entitled to any "Interest Credits" associated with the Defendant’s share of the total account balance from [Insert the Marriage End Date or a Specific Date] until the date of distribution.
Option D. - Percent of the Total Account Balance MINUS a Dollar Amount.
Amount of Defendant’s Benefit: The Order shall assign to the Defendant an amount equal to [Insert % Amount] Percent of the Plaintiff’s Total Account Balance accumulated under the Plan as of [Insert the Marriage End Date or a Specific Date] MINUS [Insert $ Amount]. Further, the Defendant shall be entitled to any "Interest Credits" associated with the Defendant’s share of the total account balance from [Insert the Marriage End Date or a Specific Date] until the date of distribution.
Option E. - Percent of the Total Account Balance AFTER DEDUCTING a Dollar Amount.
Amount of Defendant’s Benefit: After DEDUCTING [Insert $ Amount] from the Plaintiff’s Total Account Balance accumulated under the Plan as of [Insert the Marriage End Date or a Specific Date] the Defendant will be assigned an amount equal to [Insert % Amount] Percent of the Plaintiff’s remaining Total Account Balance. Further, the Defendant shall be entitled to any "Interest Credits" associated with the Defendant’s share of the total account balance from [Insert the Marriage End Date or a Specific Date] until the date of distribution.
Option F. – Dollar Amount of the Total Account Balance
Amount of Defendant’s Benefit: The Order shall assign to the Defendant an amount equal to [Insert $ Amount] Dollars of the Plaintiff’s Total Account Balance accumulated under the Plan as of [Insert the Marriage End Date or a Specific Date]. Further, the Defendant shall be entitled to any "Interest Credits" associated with the Defendant’s share of the total account balance from [Insert the Marriage End Date or a Specific Date] until the date of distribution.
Death of Defendant: If the Defendant dies before the Plaintiff and the Defendant has not started to receive benefits, the Defendant award shall [choose A. or B.]
[Choose Option A, B. or C.]
Option B. – Percent Amount of the Marital Portion*
B. - Amount of Alternate Payee’s Benefit Payments: From the monthly pension benefits otherwise payable to the Plaintiff, the QDRO shall assign to Defendant an amount equal to [Insert % Amount] Percent per month commencing as soon as administratively feasible following the date the Order is approved as a Qualified Domestic Relations Order by the Plan Administrator.
* If the Plaintiff is currently receiving benefits, the QDRO CANNOT reflect a Percent of the Marital Portion. Instead, the QDRO must be drafted using a Percentage of the Total Monthly Benefit currently being paid to the Plaintiff. In order to calculate a Revised Percent to be inserted into the QDRO, do the following:
Step #1: Determine the following Dates. 1. The Date the Plaintiff began participating (Start Date)in the Pension Plan. 2. The Date of Marriage. 3. The Date the Marriage Ended (Cut-off-Date or Date of Classification). 4. The Date of Retirement. 5. The Date of Termination if prior to the Date of Retirement.
Step #2: Determine the Marital Coverture Fraction.
Numerator of the Fraction: The number of months the Plaintiff participated in the plan during the marriage. [Use Start Date if after the Marriage Date, otherwise use the Marriage Date] to [Use the earlier of the Termination Date or Retirement Date if prior to the Marriage End Date, otherwise use the Marriage End Date.]
Denominator of the Fraction: The number of months the Plaintiff participated in the plan to the earlier of the Termination Date or Retirement Date. [The Start Date] to [The earlier of the Termination Date or Retirement Date]
Step #3: Determine the Revised Percent.
Coverture Fraction multiplied by the Defendant’s Original Percent equals the Revised Percent to be inserted in the QDRO.
C. - Amount of Alternate Payee’s Benefit Payments: From the monthly pension benefits otherwise payable to the Plaintiff, the QDRO shall assign to Defendant an amount equal to [Insert $ Amount] Dollars per month commencing as soon as administratively feasible following the date the Order is approved as a Qualified Domestic Relations Order by the Plan Administrator.
