What is the difference between Separate Interest and Shared Interest QDROs with defined benefit plans?

A defined benefit pension plan provides a specific pre-determinable amount of benefits to a participant at the individual’s projected date of retirement. The form of benefit paid under this type of plan is generally a monthly annuity. A QDRO dividing a defined benefit plan is either in the form of a separate interest QDRO or a shared interest QDRO. Knowing the impact of both types of QDROs can impact what both parties receive from the plan during their respective lifetimes. It also impacts whether there is a survivor benefit to be paid from the retirement plan.


In order to determine what type of QDRO is necessary, you must know whether the participant (employee) has retired and begun receiving retirement benefits. If a participant is retired, then a shared interest QDRO in almost all cases is your only option. The alternate payee (former spouse) is awarded a share of the participant’s monthly benefit in the QDRO. Whether there are survivor benefits for the alternate payee is determined by the election made by the participant at retirement in most cases.


If the participant is not retired and receiving a monthly benefit, most private defined benefit pension plans will require a separate interest QDRO. However, there are a few plans (mostly union) which will require a shared interest QDRO. A The alternate payee is awarded a separate interest in the retirement benefits to be paid over the alternate payee’s lifetime so there is no issue with survivor benefits.


If the participant is not retired and receiving a monthly benefit, most public defined benefit plans require a shared interest QDRO. Some public defined benefit plans allow the option of selecting between a separate interest QDRO or a shared interest QDRO. For example in California CalPERS and CalSTRS allow a choice between a separate interest or shared interest QDRO.


QDROCounsel takes the guess work out of whether to award a separate interest QDRO or shared interest QDRO to make sure both sides will receive their entitled benefit to the extent possible. Knowing the difference between a separate and shared interest QDRO and how that impacts your client is important.

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