Model Separation Agreement Language
Defined Contribution Plans
This model may be used for 401(k) and similar cash account type plans. Like all models it will need to be modified to fit the exact circumstances of the parties’ agreement and the rules of the plan.
a. Division of Retirement Benefits in the [plan name]. The [Wife / Husband] is a Participant in the [plan name] (“Plan”). For purposes of dividing marital property, the [Wife / Husband] is an Alternate Payee who is granted a portion of the Participant’s Plan benefits as described below.
CHOOSE ONE OF THE FOLLOWING FOR SECTION b:
b. Amount of Benefits Assigned: The Alternate Payee is assigned _____ percent (____ %) of the Participant’s total account balance in the Plan, determined as of _______________ (the Assignment Date).
b. Amount of Benefits Assigned: The Alternate Payee is assigned _____ dollars ($____) of the Participant’s total account balance in the Plan, determined as of _______________ (the Assignment Date).
CHOOSE ONE OF THE FOLLOWING FOR SECTION c:
c. The Participant’s total account balance shall NOT include any outstanding Plan loans. In other words, the Alternate Payee’s assigned share of the benefits will be calculated after the loan amount is first subtracted from the Participant’s total account balance.
c. The Participant’s total account balance shall include any outstanding Plan loans. In other words, the Alternate Payee’s assigned share of the benefits will be calculated without subtracting the loan amount from the Participant’s total account balance.
d. If there are not sufficient assets in the Participant’s accounts to satisfy the award of benefits to the Alternate Payee, then the Alternate Payee will be assigned One Hundred Percent (100%) of the Participant’s total account balance as of the Assignment Date.
e. Separate Account and Investment Gains/Losses: The benefits assigned to the Alternate Payee shall be taken pro rata from the Participant’s subaccounts and investments [if appropriate add: not including any Plan loans) and maintained in a separate Plan account. The Alternate Payee’s account shall be credited with investment gains and losses beginning on the Assignment Date.
f. Alternate Payee’s Death: If the Alternate Payee dies prior to distribution of his/her entire account balance, all remaining benefits shall be paid to the Alternate Payee’s beneficiary(ies). In the absence of a designated beneficiary, the Alternate Payee’s benefits will be paid to his/her estate or will be distributed in accordance with the Plan’s terms.
g. Participant’s Death: The Participant’s death shall not affect the Alternate Payee’s right to the Plan benefits assigned in this Agreement, and the Alternate Payee shall be treated as the Participant’s surviving spouse for purposes of any death benefits to the extent necessary to protect the Alternate Payee’s assigned benefits.
h. QDRO Preparation: The [Wife / Husband] shall retain Steven L. Abel of AbelsQDROs to prepare a qualified domestic relations order (“QDRO”) that is consistent with this Agreement. The parties agree to fully cooperate and provide any plan documents or authorization necessary to complete the QDRO process. The parties shall share equally any fees for the Plan or its representative to review the QDRO.
i. Continued Jurisdiction: The court shall retain jurisdiction to amend the provisions of this Agreement, to amend the QDRO, and to issue new orders to enforce the parties’ intent regarding the Participant’s Plan benefits that are assigned to the Alternate Payee.
j. Participant’s Actions: The Participant shall not act, or refuse to act, in any manner that could diminish the Alternate Payee’s right to the Plan benefits assigned in this Agreement and in the related QDRO. If the Participant does take such action/inaction, the Participant shall make payments directly to the Alternate Payee to the extent necessary to restore the Alternate Payee to the position he/she would otherwise have been in without the Participant’s action/inaction.
k. The parties each represent that they have an interest in the following additional retirement plans:
HUSBAND’S / WIFE’S PLANS:
[list names of other plans here]
WIFE’S / HUSBAND’S PLANS
[list names of other plans here]
l. The parties represent that they do not have an interest in any plans not mentioned in paragraphs a to k above.
m. Except as provided in paragraphs a to j above, the parties waive any interest they may have in any retirement plan in the name of the other party, listed in paragraph k above, as further provided in this paragraph m.
The parties shall execute any spousal waivers that may be required under the Retirement Equity Act of 1984 or any existing or similar federal or state statute that may be enacted. This paragraph is intended to substitute for any other statement, prepared form or document which might be required by any plan, fund, trust, administrator, trustee or similar entity or person, so that each party may receive said benefits as if the parties never married.
Each party (as “Releasee”) hereby elects, and the other party (as “Releasor”) hereby consents to, a waiver and release of any and all benefits, including, without limitation, the qualified joint and survivor annuity benefit form of benefit under all pension, retirement, death benefit, stock bonus or profit-sharing plans, systems or trusts (hereinafter collectively called “employee plans”) of which the Releasor is, or may become, a participant, beneficiary or member. This waiver and release is meant, without limitation, as a waiver pursuant to Internal Revenue Code Section 417(a). If requested, the Releasor shall consent in writing, in any form requested by the Releasee, to any such election. The spousal consent of the Releasor set forth herein is irrevocable. Each party acknowledges that he/she has received an explanation of a qualified pre-retirement survivor annuity in accordance with Internal Revenue Code Section 417(a)(3)(b) and that the effect of this consent is to deny Releasor any right, interest or annuity in, to, or from the Releasee’s benefits under any employee benefit plan, now or in the future.
The Releasor acknowledges and hereby consents to the Releasee’s election that upon Releasee’s death, all death benefits under any employee plan of the Releasee will be paid to such person as Releasee may have designated at any time before the execution of this Agreement or may designate from time to time hereafter, in Releasee’s sole and unfettered discretion.
If the Releasor shall receive any part of or benefits from the Releasee’s account or accrued benefit in any employee plan, other than pursuant to a beneficiary designation executed after the date hereof by the Releasee which designation expressly names the Releasor as a beneficiary, Releasor shall promptly turn same over to the Releasee (or if the Releasee if not then living, to his/her designated beneficiaries under said employee plan, if any, or if there is no designated beneficiary, to the Releasee’s estate).
The parties intend that this Agreement be accepted as a spousal consent by each of them as Releasee to a waiver of a qualified pre-retirement survivor annuity pursuant to Internal Revenue Code Section 417(a).
n. Nothing herein shall be deemed to waive either party’s Social Security rights.