Retirement Plans

Question 1

Deferred Division or Future Share Method

Answer 1

One of three methods that can be used to divide pension benefits. No present value is determined. Each spouse is awarded a share of the benefits if and when
they are paid.

Question 2

Defined Benefit Plan

Answer 2

Type of employer-sponsored pension plan that promises to pay the employee a certain amount per month at retirement time. It does not have a cash value
today.

Question 3

Double-Dipping

Answer 3

When one spouse is paid twice from the same asset

Question 4

Employee Retirement Income Security Act of 1974 (ERISA)

Answer 4

A federal law that sets minimum standards for pension plans in private industry. ERISA does not require any employer to establish a pension plan—it only
requires that those who establish plans must meet certain minimum standards. The law generally does not specify how much money a participant must be paid
as a benefit. ERISA requires plans to regularly provide participants with information about the plan including information about plan features and funding; sets minimum standards for participation, vesting, benefit accrual, and funding; requires accountability of plan fiduciaries; and gives participants the right to sue
for benefits and breaches of fiduciary duty. ERISA also guarantees payment of certain benefits through the Pension Benet Guaranty Corporation, a federally
chartered corporation, if a define plan is terminated.

Question 5

General Agreement on Tariffs and Trade (GATT) Rate

Answer 5

Interest rate based on a 30-year Treasury bond interest rate and is used as a benchmark for calculations of lump-sum distributions from defined benet plans.

Question 6

Pension Benet Guaranty Corporation (PBGC)

Answer 6

A federal corporation created by the government that announces monthly interest rates (for the following month) that are used to calculate the present value
of pension plans. This rate is based on average annuity rates.

Question 7

Qualified Domestic Relations Order (QDRO)

Answer 7

A court ruling earmarking a portion of a person’s retirement or pension fund payments to be paid to his/her ex-spouse as part of a division of marital assets.
The fund administrator makes payments directly to the non-employee ex-spouse at the time of the divorce or at the time the employee’s retirement payments
are to begin.

Question 8

Reserved Jurisdiction

Answer 8

One of three methods that can be used to divide pension benefits. In this instance, the court retains authority to order distributions from a pension plan at some point in the future.

Question 9

Retirement Equity Act of 1984 (REA)

Answer 9

This Act amended ERISA to introduce mandatory spousal rights in pension plans so the choice of the form of the benefit received from a pension plan was no longer solely the participant’s choice.

Question 10

Section 72

Answer 10

This section of the IRS Code allows the alternate payee to receive money from a qualied plan, pursuant to a QDRO, without having to pay a 10% tax penalty.
The distribution would still be subject to ordinary income tax.

Question 11

Vesting

Answer 11

In a retirement account, “vesting” means ownership. If an employee is “fully vested,” he/she owns 100% of the account balance. When an employee is
“partially vested,” he/she is only entitled to a specified percentage of the employ