Issues Relevant to Defined Ben- efit Plans. The treatment of subsidies provided by a plan and the treatment of future increases in benefits due to increases in the participant’s compensation, addi- tional years of service, or changes in the plan’s provisions are among the matters that should be considered when drafting a QDRO that uses the separate interest approach to allocate benefits under a defined benefit plan. Subsidies. Defined benefit plans may promise to pay benefits at various times and in alternative forms. Benefits paid at certain times or in certain forms may have a greater actuarial value than the basic retirement benefits payable at nor- mal retirement age. When one form of benefit has a greater actuarial value than another form, the difference in value is often called a subsidy. Plans usually provide that a participant must meet specific eligibility requirements, such as working for a minimum number of years for the employer that maintains the plan, in order to receive the subsidy. For example, a defined benefit plan may offer an ‘‘early retirement subsidy’’ to employees who retire before the plan’s normal retirement age but after having worked for a specific number of years for the employer maintaining the plan. In some cases, this subsidized benefit provides payments in the form of an annuity that pays the same annual amount as would be paid if the pay- ments commenced instead at the normal retirement age. Because these benefits are not reduced for early commence- ment, they have a greater actuarial value than benefits payable at normal retire- ment age. This subsidy may be available only for certain forms of benefit. A QDRO may award to the alternate payee all or part of the participant’s basic retirement benefits. A QDRO can also address the disposition of any sub- sidy to which the participant may be- come entitled after the QDRO has been entered.
