Alternate payee is a term that has been used for quite a while now and it isn't going anywhere anytime soon. This term is used when discussing pensions and who can qualify to receive the benefits of your pension when it comes to a Qualified Domestic Relation Order (QDRO). Let's take a look at the alternate payee so you can understand what it's all about.
The Employee Retirement Income Security Act (ERISA), defines an alternate payee as your spouse, your former spouse, your child or any other dependent of someone participating in a QDRO who has the right to receive a portion or all of the benefits that are payable from a plan.
One of the most confusing things when it comes to an alternate payee is that a QDRO is most commonly drafted when a couple is going through a divorce. Some people don't realize is that it's possible for a current spouse to be an alternate payee, even if the couple is separated.
An advantage to naming a current spouse as an alternate payee is when the spouse needs the money that will be sent via a QDRO when the divorce will not be finalized for the foreseeable future. This is a technique that many couples don't think of that should be considered.
Now that you know what an alternate payee is and who qualifies, you can make sure your family is protected in your QDRO. If you have any questions about alternate payees, you should discuss this issue with your financial advisor and your attorney.