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The Book Introduction
When couples get divorced they must decide how to divide their property. Retirement benefits (pensions) often form a substantial part of the parties’ total marital estate and many times are the largest single marital asset afforded the couple. Similar to other assets, pensions are typically divisible in cases of divorce to the extent that they are acquired during the period of marriage. In order to divide a pension, the value of the retirement benefits accumulated during the period of marriage must be determined. The division of these benefits follows a 3-step process.
1. Classification
Each pension is classified as to whether or not it is considered property, and from there, separate or marital property. There is a broad general consensus that retirement plans of all types do constitute property.
2. Valuation
Each pension that is considered marital property is appraised to determine its value.
3. Distribution
Each pension that is considered marital property is analyzed to determine the most equitable way it should be divided and distributed to the party.
The Table of Contents
Introduction
* Retirement benefits are divisible upon divorce. - To the extent to which they were acquired during the marriage. - Must be valued before they can be divided. * Division of Retirement Benefits follows a 3 step process. - Classification of the pension as either marital or separate property. - Valuation of the marital property to determine value. - Distribution of the marital property to the parties.
* Meeting #1 - Discussion of Basic Issues * Meeting #2 - The Valuation Process * Meeting #3 - Division of the Benefits
* Future Benefit Plans - Retirement Plan - Disability Plan * Classification of Future Benefit Plans - Matured Plan - Unmatured Plan - Vested Plan - Unvested Plan - Defined Benefit Plan - Defined Contribution Plan - Noncontributory Plan - Contributory Plan
* What Is Property? - Property is Certain - Property is Transferable * Pensions as Property - Argument against pensions as property - Argument in favor of pensions as property
* All Property Model - must meet the definition of property - is owned by one or both parties on the date of classification * Dual Property Model - must meet the definition of property - is owned by one or both parties on the date of classification - was acquired during the marriage - is not expressly defined as separate property * Comparison of the Two Models
* The Two Methods of Distribution - Immediate Offset Method - Deferred Distribution Method * Strengths and Weaknesses of Immediate Offset Method * Strengths and Weaknesses of Deferred Distribution Method * Reserved Jurisdiction Method
* Method of Payment * Time of Commencement of Benefits * Remarriage * Modification of the Award * Taxes * Death * Interest * Future Pension Options * Loss of Pension Benefits * Using Present Value to Set a Maximum Amount Payable
* Introduction * What is a Qualified Domestic Relations Order (QDRO)? * ERISA, REA and the Antialienation Provision * Criteria for a QDRO * Types of Plans - QDRO Issues Under ERISA Defined Contribution Plans - QDRO Issues Under ERISA Defined Benefit Plans * Shared Interest Approach * Separate Interest Approach - DRO Issues under State and Local Government Plans - Court Ordered Benefits Issues under the Military Retirement System - Court Order Acceptable for Processing Issues under the Civil Service - Retirement System (CSRS) and Federal Employees Retirement System (FERS) * Deferred Offset Awards * Other Division Options for Deferred Distribution - Liquidation - Informal Offset
* Valuing Pensions for Equitable Distribution * Valuation of Defined Benefit Plans - Present Value - Step 1 - Determine the Amount of the Benefit - Step 2: Discount to Present Value - Step 3: Mortality Discount - Step 4: Discount for Vesting Status - If Applicable - Step 5: Apply a Coverture Fraction - If Applicable * Methods of Determining Present Value of Defined Benefit Plans - GATT Method - PBGC Actuarial and Mortality Table Method * Other Techniques for Valuing Defined Benefit Plans - Valuation Formulas found within the Plan - Total Contributions to the Plan - Total Offset - Withdrawal Value * Valuation of Defined Contribution Plans - Segregation Method - Subtraction Method - Coverture Method
* Bankruptcy * Early Retirement Subsidy * Non-Vested Pension Benefits * Passive Appreciation * Post-Retirement Cost-of-Living Adjustments * Retirement Incentives/Severance Pay * Social Security Offset * Stock Options * Survivor Benefits * Tax Consequences
Appendix I - General Pension Valuations FAQs
Appendix II - General QDRO FAQs
Appendix III - Immediate Offset v. Deferred Distribution
Appendix IV - PBGC Actuarial and Mortality Table Method v. GATT Method
Appendix V - Sample Authorization & Questionnaire
