“Pension and divorce’ and “Divorce Pension calculator” are the most targeted combination of key words in Google. According to statistics, the divorce rate for the people older than 50 has doubled over the last 20 years. It is important that divorcing spouses understand how their retirement plans must change.
Pension and divorce related issues are complex substantively and procedurally. Unlike division of property, the “Divorce Pension calculator” requires an understanding of the correlation between community property law, regulations governing employee benefit and statutes. Moreover, pension and divorce matters require you to navigate the policies and procedures adopted by plan administrators. Dividing an employee pension in the context of a divorce is a process that requires gathering information about the plan in general and the specific employee’s in particular. Pension and divorce issues include analyzing the facts and circumstances on a quantitative and qualitative level, and then coming to a decision on how best to divide the particular benefit.
Divorce Pension calculator includes consideration of relevant tax consequences regarding a particular disposition of benefits and potential changes in a client’s or employee benefit plan’s circumstances that may affect the value of the benefits to the client, including the effect on support.
Pension and divorce caution – Timely Notice to plan.
Obtaining information about the identity of the spouses’ employee benefit plans and nature of plan is important to protecting a spouse’s community interest. Under Family Code 2040, automatic temporary restraining orders listed on the back of the summons prohibit both spouses from transferring property. However, it is a good idea to give each plan notice of the pending divorce in order to prevent one party from unilaterally diminishing the value of any benefit. Under Family Code 2062 (c) , within 30 days after receipt of a written request, an employee spouse shall provide the non-employee spouse with the information about employee benefit plan that covers the employee spouse.
Divorce Pension calculator – Evaluating Qualitative and Quantitative Elements
Divorce Pension calculator has both quantitative and qualitative considerations. Quantitative elements involve the amount of the benefit payable based on estimates in the case of future payouts, numbers when benefits are payable or immediately available for distribution. Qualitative elements relate to the specific plan features such as the payment of benefits on the death of either party or eligibility for distribution.
Under California case law employee retirement benefits accumulated during marriage, whether or not vested at the time of divorce, are community property.
Divorce Pension calculator is proration rule:
Numerator: years if employment while marriage
Denominator: total years employed for retirement.
For example, Husband worked for ABC company for 10 years at the time he married his wife in 1992. The couple divorced in 2002 and husband will be eligible to retire in 2012. In all of these years husband was a participant in ABC qualified pension plan, where the pension benefit is measured by years of services. Husband is not eligible for retirement at the time of the divorce. The portion of the pension benefit is community property is calculated as follows:
10 (years of service while marriage ) divided 30 ( total years of employed). Thus, pension would be 1/3 community property
Because husband is not yet eligible for retirement, there are two forms the decree can take:
First option is if and when received, she gets her 1/6 portion (half of 1/3 community share);
Second option is cash her out by awarding other assets of equal value.
Each benefit plan differs in methods of funding, computation of benefits, distribution options, survivor and death
What is special about divorce and pension, with a few exceptions a there must be a court order to get a share of a pension. The court order or court approved property settlement that provides for a pension plan to make payments to a former spouse is called a domestic relations order. In order for the employer to pay directly to the divorced spouse, certain procedural requirements must be met. A domestic relation order which meet those requirements is Qualified domestic relationship order.