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RIGHTFULLY YOURS: Past-Due Child Support, Alimony, & Securing Your Share of Your Ex’s Pension
Preface
1. Did Your Divorce Decree Grant You a Portion of Your Ex-Husband’s Future Pension? (It Should Have!)
1. Don’t Forget the Pension
2. It’s Your Property Right
3. It’s Not Alimony
4. How Much Is the Retirement Benefit Worth?
4.1 Defined contribution plans
4.1.a Calculating the value of a plan
4.1.b What is vesting?
4.2 Defined benefit pension plans
5. The Use of Offsetting Assets
6. A QDRO Is a Must
2. What Is a QDRO? (And Why Do You Need One?)
1. Horror Story No. 1
2. Horror Story No. 2
3. Horror Story No. 3
4. Congress Created QDRO Laws in 1984
5. The Requirements of a QDRO
6. Pension Plan Administrators Can Throw Out Your QDRO If They Don’t Like It
3. What Types of QDROs Are Available?
1. Two Types of QDROs for Defined Benefit Pension Plans
2. Survivorship Benefits under Defined Benefit Pension Plans
3. Former Spouses Can Get Survivor Protection
4. The Separate Interest QDRO
5. The Shared Payment QDRO
6. QDROs for Defined Contribution Plans
4. Do You Need to Get an Attorney to Draft a QDRO? (What If You Can’t Afford One?)
1. Contact Your Original Divorce Attorney
2. Contact a New Family Law Attorney
3. Try to Draft a QDRO Yourself Using a Sample QDRO from this Book
3.1 Step-by-Step Instructions for Completing a Sample QDRO Yourself
3.1.a Section 1
3.1.b Sections 2 and 3
3.1.c Section 4
3.1.d Section 5
3.1.e Section 6
3.1.f Section 7
3.1.g Section 8
3.1.h Section 9
3.1.i Section 10
3.1.j Section 11
3.1.k Section 12
3.1.l Section 13
3.1.m Section 14
3.1.n Section 15
3.1.o Section 16
3.1.p Section 17
4. Getting the Judge’s Signature
5. How Do You Deal with the Plan Administrator?
1. Plan Administrators and You
2. Remaining Nonadversarial with the Plan Administrator
3. Problems in Discovery
4. Your Rights under the Federal Pension Law Called ERISA
5. Administrative Fees for Processing QDROs
6. Constructive Notice of a QDRO
7. The Company’s Own Model QDRO Language
8. The Administrator’s Approval and Signature
6. Could Your Ex-Husband Have More than One Pension?
1. Nonqualified Retirement Plans Not Subject to QDROs
2. Types of Defined Contribution Plans
3. Types of Defined Benefit Pension Plans
4. Coverage under Two Defined Benefit Pension Plans
5. A Separate QDRO for Each Plan
6. Don’t Forget about Your Ex-Husband’s Previous Employment
7. How Much of the Pension Are You Entitled to Receive?
1. Determining the Marital Portion of a Defined Contribution Plan
2. Premarital Account Balances
3. QDRO Tips for Determining Your Share of a Defined Contribution Plan
3.1 Interest and investment earnings
3.2 Sneaky plan loans by participants
3.3 Contributions made after divorce that were for periods before divorce
4. Determining the Marital Portion of a Defined Benefit Pension Plan
5. Coverture: The Recommended Approach for QDROs under Defined Benefit Pension Plans
5.1 The mechanics of the coverture approach
5.2 Model coverture language
5.3 If your divorce decree did not include a coverture formula
8. When Can You Start Receiving Your Share of the Pension? (Do You Have to Wait Until Your Ex Retires?)
1. The Early Retirement Subsidy
1.1 How does the early retirement subsidy affect an alternate payee under a QDRO?
1.2 What if a shared payment QDRO is used?
1.3 When can you receive benefits under a defined contribution plan?
2. Direct Distribution or Rollover to an Individual Retirement Account
3. Establishing Separate Accounts
9. Are You Entitled to Receive Your Share of the Pension for Your Entire Lifetime? (If So, How Can You Secure a Lifetime Pension?)
1. Use of a Separate Interest QDRO
2. Use of a Shared Payment QDRO
3. Contact the Plan Administrator If Uncertain
4. What about a Defined Contribution Plan?
10. Is It Too Late to Draft a QDRO Now? (Your Divorce Occurred Years Ago)
1. The Importance of Drafting a 401(k) Plan QDRO before Your Ex-Husband Terminates His Employment
2. What If the Plan Makes a Distribution to Your Ex-Husband While the QDRO Process Is Pending?
3. Is There an 18-Month Maximum Segregation Period for Pending QDROs?
4. Check for a Possible Rollover to an Individual Retirement Account
5. What If the Original Divorce Decree Was Silent on the Pension Issue?
6. The Buildup of Child Support or Alimony Arrearage after Divorce
11. What about Past-Due Child Support and Alimony (Can You Use a QDRO for This?)
1. Does This Sound Familiar?
2. QDROs for Child Support and Alimony
3. Using Multiple QDROs
4. A Tax Tip for Child Support QDROs
5. Getting Past-Due Child Support Payments or Alimony from a Defined Contribution Plan
6. Getting Past-Due Child Support Payments or Alimony from a Defined Benefit Pension Plan
Sample 1: To Obtain Past-Due Child Support (From a defined benefit pension plan)
Sample 2: To Obtain Past Due Child Support (From a defined contribution plan such as a 401 (k))
12. Your Ex-Husband Has Already Retired (Is It Too Late to Draft a QDRO?)
1. You Must Use a Shared Payment QDRO If Your Ex-Husband Is Retired
2. A Possible “Catch-22” Situation That Will Destroy Any Chance You Have to Receive a Lifetime Pension
3. No Retroactive Pension Payments Are Allowed If Your Ex-Husband Is Already Retired
4. There May Be a Way to Recoup Lost Pension Payments
13. Your Ex-Husband Has Died (Is It Too Late to Draft a QDRO?)
1. Get the QDRO Done before Your Ex-Husband Dies
2. Your Ex-Husband Died before the QDRO Was Done: What Do You Do Now?
14. You Are Going Through a Divorce (What Should You Know about the QDRO Process?)
1. Complete Discovery of All Plans of Coverage
2. The Separation Agreement: Making Sure Your Attorney Doesn’t Shortchange Your QDRO Rights
2.1 Calculation of assigned benefit: Coverture recommended
2.2 Survivorship protection
2.3 Postretirement cost of living adjustments
2.4 Early retirement subsidy
2.5 Anti-circumvention language
3. Incorporate the QDRO by Reference into Your Decree
4. Don’t Forget the Boilerplate
5. Follow-Through with the Plan Administrator
15. Your Attorney Never Drafted a QDRO for You (Is This Considered Malpractice? What Are Your Options Now?)
1. Failure to Draft a QDRO
2. Be Proactive
3. Consider a Malpractice Suit a Last Resort
16. What If Your Ex-Husband Is Covered under the Federal Civil Service Retirement System?
1. Dividing the Employee Annuity
1.1 What are the employee eligibility requirements?
1.2 What are the maximum allowable payments to the former spouse?
1.3 Are there any application requirements for the former spouse?
1.4 When do payments to a former spouse terminate?
2. The Refund of Employee Contributions
2.1 What amounts are subject to a court order acceptable for processing?
2.2 Will the payment of a refund of employee contributions terminate any future rights to a portion of the employee annuity or a survivor annuity?
2.3 Can a COAP prevent a separated employee from receiving a refund of employee contributions, in order to secure a former spouse’s future right to a portion of an employee annuity or a former spouse survivor annuity?
3. Former Spouse Survivor Annuities
3.1 What are the maximum survivor benefits payable under the Civil Service Retirement System?
3.2 Are there eligibility requirements for the former spouse?
3.3 Do you have a future right to a former spouse survivor annuity?
3.4 How does the employee or former spouse pay for the cost of providing a former spouse survivor annuity under a COAP?
3.5 Once a court order acceptable for processing has been prepared, where should it be sent?
3.6 Can court orders bar the payment of employee annuities?
3.7 What kind of formulas can be used in a COAP to identify the former spouse’s share of the employee annuity?
Sample 3: Model Court Order Acceptable for Processing (COAP) Under the Civil Service Retirement System
17. What If Your Ex-Husband Is Covered under a Military Retirement Plan?
1. The 10/10 Rule for Property Divisions
2. Maximum Payments to a Former Spouse
3. The Military Uses Only the Shared Payment Approach
4. The Soldiers’ and Sailors’ Civil Relief Act of 1940
5. Survivor Benefit Plan (SBP) Coverage for a Former Spouse
6. Deemed Election of Former Spouse Coverage
7. Termination of SBP Surviving Spouse Coverage on the Remarriage of a Former Spouse before Age 55
8. Anti-Circumvention Language
9. Model Military Court Orders to Divide Retired Pay
Sample 4: Military Qualifying Court Order (For active members)
Sample 5: Military Qualifying Court order (For reservists)
Sample 6: Military Qualifying Court Order (If currently retired)
18. What If Your Ex-Husband Is Covered under the Railroad Retirement Board Pension Plan?
1. A Tier I Annuity Is Not Divisible by a Court Order
2. A Tier II Annuity Is Divisible by a Court Order
3. Vested Dual Benefit Payments and Supplemental Annuities
4. Survivor Rights to Tier II Annuities
5. Other Railroad Retirement Board Pension Plan Coverage
6. Model Court-Ordered Language to Divide the “Divisible Portion” of Railroad Retirement Benefits
Sample 7: Model Qaulifying Court Order to Divide Railroad Retirement Benefits
19. Is There Model QDRO Language That You Can Use?
Sample 8: Separate Interest QDRO for Defined benefit Pension Plans (For active plan participants)
Sample 9: Shared Payment QDRO for Defined Benefit Pension Plans (for active plan participants)
Sample 10: Participant Already Retired in a Defined Benefit Pension Plan (Utilizing fixed-dollar award and providing entire survivor annuity to alternate payee based on election at retirement)
Sample 11: Defined Contribution Plans (For use when simply assigning 50 percent of total account balance)
Sample 12: Defined Contribution Plans (For use when assigning a fixed-dollar amount)
Sample 13: Defined Contribution Plans (For use when participant keep premarital account balance[1])
Glossary: QDRO and Pension Terminology
Dedication
About the Author
Notice to Readers
Self-Counsel Press thanks you for purchasing this ebook
Contents
Any woman who has been divorced or is thinking about divorce must read this book. It can mean the difference between a lifetime of receiving pension benefits and child support income or receiving nothing. This book will make available to you the most powerful tool in collecting past-due child support and alimony without wasting thousands of dollars in legal fees.
This book focuses on two important issues: how to secure your share of your ex-husband’s pension benefits earned during the marriage, and how to obtain past-due alimony and child support payments from your ex-husband’s pension, profit-sharing, or 401(k) savings plan. It explains the best kept secret under federal law: the Qualified Domestic Relations Order (QDRO). By using a QDRO, you can secure your share of the pension benefits awarded to you at divorce. And you can tap into your ex-husband’s retirement benefits for child support or alimony arrearages. Millions of divorced women are unaware of this powerful tool created by Congress in 1984 to help protect the financial rights of former spouses and children.
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For discussion purposes, when I use the words “pension plan” throughout this book, I am referring to a “defined benefit pension plan.” The amount of benefits that a participant is entitled to receive under a pension plan is called his or her accrued benefit. Therefore, if an employee retires at age 65 with an accrued benefit of $2,000, he or she will receive a $2,000 monthly pension check for the rest of his or her life. Because no individual accounts are set up for employees under a pension plan, never use the words “account balance” when discussing your ex-husband’s pension benefits.
Now, the all-important question. At your divorce, how much of your ex-husband’s pension benefits are you entitled to receive as your marital share? The answer is not simple. Trying to determine how much a pension plan is worth is a difficult task even for attorneys. Quite often, divorce attorneys will hire an actuary or other pension professional to evaluate the pension. In order to evaluate your ex-husband’s accrued benefit under the pension plan at the time of your divorce, the pension professional must figure out the “present-day lump sum value” of his anticipated future monthly stream of retirement income. Just knowing that your ex-husband has earned an accrued benefit of $800 per month (as calculated by his employer) at the time of divorce does not answer the question. Under a pension plan, a participant generally cannot receive his full, unreduced accrued benefit until he reaches the plan’s normal retirement age (usually age 65). And even if you did know that his monthly accrued benefit was $800 when you divorced, what does this currently mean in terms of an immediate lump sum dollar amount? This is why it’s necessary for the attorney to hire a pension professional. They must determine, in today’s dollars, how much a future lifetime pension is worth. To do this, they incorporate such factors as mortality tables and interest rate charts.
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