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The Divorce Encyclopedia
Alternate Payee


Term Definition Alternate Payee - party other than the employee who will be paid pension benefits in the alternative.
Application in Divorce Pensions are marital property and are subject to distribution.

As it applies to divorce, the alternate payee is normally an unemployed spouse, usually a wife who was a stay-at-home mother.

Since the portion earned in a pension or retirement account during a marriage is subject to division, it is not uncommon for each spouse to keep 100% of his or her own account upon divorce or offset an account with another marital asset. Splitting each spouses pension is not the typical solution. If splitting a pension is the only option, it is done with a domestic relations order, which instructs the plan administrator to pay the Alternate Payee a specific percentage upon retirement.

See also Qualified Domestic Relations Order (QDRO).

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