The following terms may be useful in understanding this booklet. Many of the terms used in this booklet are defined by statute. In this glossary, PBGC has provided simplified definitions that apply to the information discussed in this booklet. The glossary is intended to align with statutory definitions, where applicable. In the event a conflict with a statutory definition arises, the statutory definition will prevail.
Actuarial value – The actuarially determined amount needed at a point in time to provide a specific monthly benefit at some time in the future. Value depends on the amount of the monthly benefit payment, when the benefit payments start and stop, the age(s) of the recipient(s), mortality assumptions, and interest assumptions. Also referred to as “present value” or “actuarial present value.”
Alternate payee – A participant’s spouse, former spouse, child, or other dependent who, under a QDRO, has a right to receive all, or a portion, of the participant’s pension benefits under a plan.
Annuity – A form of benefit in which payments are made at regular intervals for a specified period of time. The most common form of annuity pays monthly benefits for life.
Annuity starting date – The date as of which a periodic (for example, monthly) annuity is calculated to commence (for example, the first of the month following attainment of age 65). Due to factors such as (but not limited to) routine administrative delay, the Annuity Starting Date (sometimes referred to as “actual retirement date” or “benefit commencement date”) is NOT necessarily the same date on which a pension plan or PBGC sends the first benefit payment.
Beneficiary – The person named to receive benefits upon the death of a participant or alternate payee.
Benefit – A payment provided for under a pension plan.
Defined benefit plan – A type of pension plan that promises participants specified benefits at retirement. Retirement benefits usually are based on the number of years worked for a company or in an industry and may also be based on salary during that time.
Defined contribution plan – A type of pension plan in which an employee receives the amount in an individual account, which includes contributions made by the employer and, if applicable, the employee. Retirement benefits are based on the amount in each participant’s account, adjusted for investment experience and plan expenses. The most common types of defined contribution plans include profit-sharing plans, 401(k) plans, employee stock ownership plans (ESOPs), and money purchase plans.
Domestic relations order – Any judgment, decree, or order (including approval of a property settlement agreement) that (1) provides child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant, and (2) is made pursuant to a state’s domestic relations law.
Earliest PBGC retirement date (EPRD) – The “earliest PBGC retirement date” has a specific meaning for PBGC purposes and is defined in PBGC regulation 29 C.F.R. § 4022.10. Typically, a participant’s age as of the participant’s EPRD will be 55 unless (1) under the plan’s terms, the participant cannot receive a benefit until a later age, or (2) PBGC determines under a facts-and-circumstances test that the participant could retire earlier than 55. PBGC tells each participant what the participant’s EPRD is in a benefit determination.
Joint-and-survivor annuity – An annuity that pays benefits over the participant’s lifetime and thereafter over the lifetime of the person named as the survivor.
Normal retirement benefit – The benefit payable under the plan at the age for normal retirement defined under a plan. In most cases, the normal retirement age will not be greater than 65 years of age or, if later, the fifth anniversary of the date the participant commenced participation under the plan.
Participant – An employee or former employee who may be entitled to a benefit under a pension plan, or whose beneficiaries may be entitled to a benefit. A participant is said to participate in or to be covered by the plan.
Qualified Domestic Relations Order (QDRO). A QDRO is type of Domestic Relations Order (see definition above) which (i) gives an alternate payee the right to receive all or a portion of the benefits payable with respect to a participant under the plan and (ii) the plan and/or PBGC has satisfied certain legal and administrative requirements.
Qualified joint-and-survivor annuity (QJSA) – A QJSA is a joint-and-survivor annuity where (1) the participant receives a definite amount of money at regular intervals for life, and (2) after the participant dies, the surviving spouse (who may be the spouse to whom the participant was married at retirement, or a former spouse who is treated by a QDRO as the participant’s spouse) receives a definite amount of money (not less than 50% or more than 100% of the amount received by the participant before death) at regular intervals for life.
Qualified preretirement survivor annuity (QPSA) – A QPSA is an annuity provided to a surviving spouse when a vested participant dies before receiving payment of the participant’s benefit. The annuity is generally payable for the life of the surviving spouse (who may be the spouse to whom the participant was married at the time the participant died, or a former spouse who is treated by a QDRO as the participant’s spouse). In PBGC-trusteed plans, the surviving spouse may elect to receive the QPSA in the form of a straight-life annuity or certain-and-continuous annuity.
Separate interest approach – A QDRO that divides the value of the participant’s benefits into two separate parts-one for the participant and one for the alternate payee.
Shared payment approach – A QDRO that gives the alternate payee a portion of the participant’s benefit payments under the plan made during the participant’s lifetime. In other words, the participant and the alternate payee share the payments.
Single-life annuity – An annuity that pays benefits over a period of time that depends, at least in part, on the survival of only one person, for example, a straight life annuity or certain-andcontinuous annuity.
Spousal consent – A spouse’s written and notarized agreement to allow the participant to waive the QPSA or elect a form of benefit other than a QJSA.
Spouse – An individual under a formal relationship denominated as a marriage by State law. A QDRO can provide that the participant’s former spouse be treated as the participant’s spouse for certain pension benefits.
Straight-life annuity – An annuity that pays benefits over the recipient’s lifetime. Once the recipient dies, no further annuity payments are payable to anyone.
Subsidized early retirement benefit – An early retirement benefit that also includes an early retirement subsidy.
Survivor benefit – The survivor part of a preretirement survivor annuity or a joint-and-survivor annuity that is paid to a beneficiary after the participant dies.