Divorce and Pension Benefits: What are a Woman’s Rights During Divorce?
Submitted by: Cathy
The Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1968 allow a former wife to have rights to an ex-husband’s pension benefits. Pension rights at divorce depend on two sets of rules:
• The rules of your ex-spouse’s retirement system; and
• The divorce laws of the state in which your divorce takes place. State laws on pension rights at divorce are usually the same for pensions from all retirement systems.
There are two types of pension plans, private sector and public sector. What type plan your ex-husband has will determine whether or not you can receive benefits, how much you can receive, how often and for how long. You and your divorce attorney will base your options on the provisions of the individual pension plan.
Dividing Private Sector Pension Plans During Divorce:
Under private pension plans there are two types of plans. You have a “defined contribution” and “defined benefit” plan.
Defined Contribution Plan:
A defined contribution plan is a private tax-deferred savings plan established by a company or individual to provide a monthly lump sum of income to an individual upon retirement. A 401(K) is an example of a defined contribution pension plan.
A defined contribution plan is marital property; indeed, pensions and houses are the two most valuable marital assets a couple divide in a divorce.
In a divorce, the value of a defined contribution plan is easy to calculate: it is simply the balance in the account.
The valuation date of a defined contribution plan is very important because, unlike a defined benefit plan (the old fashioned company pension), the value of a defined contribution plan can fluctuate dramatically after a couple separate but before they divorce.
In dividing a defined contribution pension, courts are unanimous that they are not to be discounted to present value.
Defined Benefit Plan:
A defined benefit is a plan established by a company, union or individual to provide a monthly income for life to an individual upon retirement.
Unlike 401(k)s where a person owns a fund with a readily ascertainable value, with a defined benefit plan an employer pledges to pay a specific amount upon retirement, depending upon the age of the employee, years of service, salary while working there, etc. Once defined benefit plans were the most common retirement plans around, now they are most often seen with public employees or large corporate employers.
A divorce court can divide a defined benefit plan, and distribute benefits to an ex-wife. The degree of complication to effect the division depends upon the employer. When a defined benefit plan is divided, the ex-wife will receive her portion of the retirement benefits only when the ex-husband receives his benefits.
A Qualified Domestic Relations Order (QDRO) MUST be filed for you to receive benefits from a private sector pension.
Dividing Public Sector Pension Plans During Divorce:
If your ex-husband is a Federal government employee, he is a member of either the Civil Service Retirement System or the Federal Employee’s Retirement System. Instead of filing a QDRO, a Court Order Acceptable for Processing must be filed by your lawyer.
If your ex-spouse is employed by the State/Local Government or is a Teacher, a domestic relations order must be filed by your lawyer.
Social Security Benefits After Divorce:
Federal law (42 U.S. Code §407(a)) prohibits states from dividing Social Security benefits in a divorce. An ex-wife married for 10 years or more is entitled to full spousal and survivor benefits under social security, while one married less than 10 years is entitled to none.
You must be at least 62 years of age and never remarried to be eligible for his social security benefits. However, if you remarried and your husband passed away or you two divorce your rights to your first husband’s benefits are restored.
Dividing Military Pension During Divorce:
The Uniformed Services Former Spouses Protection Act, 10 U.S.C. 1408, has specific provisions for the division of a military pension. You should know:
For equitable distribution of the benefits, you must have been married for at least 10 years while your spouse was in active duty. If you were not married for 10 years during active duty, the order for division of benefits must be written as spousal support payments.
The maximum amount awarded is 50% of benefits. If combined with child support or alimony payments, then 65% of benefits may be awarded to you. If your ex-husband is eligible for a military pension, you must file a Retired Pay Court Order. The Retired Pay Court Order MUST be filed during a divorce or as part of a property settlement, not post-divorce.
You will also need to apply for payment by completing DD Form 2293, which can be obtained through the Defense Finance and Accounting Service. Include a copy of the applicable court order certified by the Clerk of the Court within 90 days of sending, your former spouse’s social security number and your contact information. Mail or fax this information to:
Defense Finance and Accounting Service
P.O. Box 998002 Cleveland
Phone: (216) 522-5301
Fax: (216) 522-6960