What are the two acceptable methods for calculating compensation for an alternate payee in a QDRO?

The correct answer highlights that the two acceptable methods for calculating compensation for an alternate payee in a Qualified Domestic Relations Order (QDRO) are a stated percentage and a stated dollar amount.

This approach allows for flexibility in how benefits can be divided. With a stated percentage, the alternate payee may receive a defined portion of the participant’s retirement benefits, which is often especially useful in cases of pension plans where benefits can vary based on factors such as the length of employment and earnings history. This method ensures that the alternate payee's share appropriately reflects future increases in the retirement benefits.

On the other hand, using a stated dollar amount provides a clear, fixed figure that the alternate payee will receive, regardless of the overall value of the retirement plan. This can be beneficial in certain cases where parties wish to avoid future complexities associated with fluctuating plan values over time.

Overall, combining these two methods accommodates various types of retirement plans and the specific needs of the parties involved, ensuring a fair distribution of retirement assets as part of the divorce settlement.