Pension Division: Your piece of the pie - The Men's Legal Center


Pension Division: Your piece of the pie

Key Assets accumulated during marriage include the house and pensions. The parties split the community property interest accumulated during marriage or each party is entitled to half the community property interest. Community property is generally all property acquired during the marriage and divided equally.  Pensions are no exception to the extent they accrued during the marriage.

Defined benefit means the recipient receives a defined benefit when he or she retires.  These plans are common among public employees or government workers.  Defined contribution means the recipient received the amount he or she contributed. 

Examples of Defined Contribution plans include IRAs, profit-sharing plans, or 401k.  They can be divided and distributed as determined by the plan administrator and applicable law.  Consider how this will be divided in light of tax consequences or future growth. The defined benefit plan is generally based on the duration of employment. It generally spells out a specific retirement date the recipient can draw retirement.

Private pensions are governed by the federal regulations of ERISA (Employee Retired Income Security Act). ERISA plans are divided in divorce via a Qualified Domestic Relations Order (QDRO) Government pension plans are divided by Domestic Relations Order (DRO)

If your ex has a Defined Benefit Pension keep in mind two considerations: What is the earliest that you can draw your portion of the retirement and does the plan offer survivor benefits? If your ex is eligible to retire at age 55 you may ask the plan to pay you your community property portion of your Ex’s retirement when your spouse is first eligible to retire even though the spouse continues to work.

It is a good idea for the out-spouse to notify the Pension or retirement account that you have an Adverse Interest in the specific pension or account, since it puts the fund on notice that you need to be notified if your spouse tries to take out loans or close the account.

Joinder. Sometimes the out-spouse may want to formally join the pension fund to the dissolution case. If so, they are party to the dissolution case.

Call the plan administrator to find out when a person can retire and if there are survivor benefits. Be careful deciding how the plan is divided as the out-spouse may  want a “cash-out” or “buy-out” of their interest without realizing the potential for future growth, tax consequences, and how that spouse plans on retiring.

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