What to Know About Dividing Pension Plans In A Divorce

Pension plans are usually divided in one of only two ways: buying out the other spouse’s present day value in the pension or by reserving juridiction to divide the plan by a Qualified Domestic Relations Order (QDRO).  The latter option is more common way in which to handle such plans. Under this option, it is ordered by the court that at the time of retirement of the employed spouse, the other one will be the recipient of a percentage of every pension check. This percentage is arrived at by dividing years when the spouses spent together in their once home as wife and husband by total number of all years when the spouse who is employed had participated in pension plan. The result amount of that division is community property percentage of pension plan. To give an example, if a husband has put in 20 years of his monetary contributions to a pension plan, and 10 of the coinciding years he lived with the wife, the share of the pension plan will be about 50 percent. In such a case, the wife will have 25 percent of the pension checks of the husband. 

Pension Benefits  

As per reservation of jurisdiction, the spouse considered a non-employee could elect to receive her or his share of the pension benefits of the employee spouse at earliest time when the employed spouse will retire. It means that in the case of the employed spouse electing not to retire at earliest opportunity, that spouse must pay the non-employed spouse what the latter would have got in case the employed spouse would have retired. To give an example, if the husband becomes eligible to retire at 55, but elects not to retire in that age, his ex-wife could demand that he provides her the amount of money she would have received if he retired during that age. It is to be mentioned that in case the wife selects this option, she will not receive any increases due to higher cost of living after that date.

Qualified Domestic Relations Orders (QDRO)

The Federal Retirement Equity Act created “Qualified Domestic Relations Orders”. In this system, the court gives orders regarding the retirement plan of the spouse. The Federal law states that the employer must comply with the order terms.  However, the QDRO is an essential step in the dissolution process. A number of companies have been created for the sole aim of making them and there are attorneys who only specialize in doing QDROs.

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Gerald A. Maggio is an experienced Orange County divorce and family law lawyer and family law attorney located in Irvine, California, serving the Orange County and Riverside areas. Mr. Maggio assists clients with legal issues including divorce, legal separation, divorce mediation, child custody, prenuptial agreements, stepparent adoptions, and other family law issues. Mr. Maggio has practiced law in California since 1999, and founded The Maggio Law Firm in 2005, focusing exclusively on divorce and family law matters.