|
||||||||||||||||||||
|
DIRECTION FOR COMPLETING THE FORM Section 1 & 2 This information can be found in the caption (top part of the first page) of the Property Settlement Agreement or Divorce Decree. Section 3 Participant (Employee Spouse) This is the individual who is the owns the Pension Plan to be divided. Section 4 Alternate Payee (Spouse or Former Spouse) This is the individual who is being awarded a portion of the Pension Plan. Section 5 Date of Marriage Section 6 Divorce Date - This is the date the divorce was effective. If the divorce has not been finalized, leave this section blank. Section 7 Date Marriage Ended - This is the cut-off date for marital property rights relative to the pension. It is usually dictated by case law. This information may be found in the Property (Marital) Settlement Agreement or Divorce Decree. Section 8 Plan Name - It is necessary to have the exact legal name of the plan. This information can usually be found on a benefit statement or in a benefits handbook. Section 9 Date Participant Joined the Plan - This is the actual date that the Participant joined the plan. This date may not be the which same day that the individual began employment. Section 10 If the Participant Terminated Employment, what was the date of termination? This is the actual date that the Participant terminated employment. Section 11 Is the Participant retired and receiving retirement benefits? Yes or No Section 12 If the answer to question # 11 is YES, please answer Questions #12 A thru F; otherwise skip to Question # 13. A. Date Participant Stopped Accruing Benefits - This is normally the retirement date. If it is not, please call us to discuss. B. Percent or Dollar Amount of Participant's benefits to be paid by the Plan to the Alternate Payee It is possible to award a percentage of the Participant's benefits (i.e. 50% of the portion of the benefit accumulated during the marriage) or a specific dollar amount each month (i.e. $750.00 per month). This information can be found in the Property (Marital) Settlement Agreement or Divorce Decree (i.e. 50%, 30%, 100% or $250.00 per month). This amount cannot be expressed as a lump sum. If a percent is chosen, how will the Marital Property Component be determined? There are two methods of distinguishing the portion of pension benefits earned by an employee during the period of marriage. The method which applies to a particular case is typically discussed in detail in the Judgment of Divorce, Property Settlement Agreement or other document which outlines the division of property. However, if such is not discussed in detail, various case law may set the standard followed by divorcing parties in different states. Option #1 - Frozen Benefit Approach: The Plan determines the employee's accrued benefit assuming that the employee terminated his employment on the Date the Marriage Ended. This benefit is referred to as the "frozen" accrued benefit. If the employee began his employment prior to the date of marriage, the Plan will calculate what part of the "frozen" accrued benefit was accumulated during the period of marriage. Option #2 - Coverture Approach: This approach compares the period of marriage to the total period of time an employee participates in his/her pension plan up until the date of retirement. This method is best explained using the following illustration: Jack and Jill were married for 10 years. Jack began his employment at the same time they got married, and worked for another 20 years after the marriage ended before retiring. Therefore, upon retirement, he will have been in the retirement plan for a total of 30 years. The formula for determining the portion of the pension accumulated during the marriage would be as follows:
Taking this a step further, if Jack and Jill were supposed to divide the portion of the benefits earned during their marriage equally, the formula would be as follows:
or, Jill's share equals 17% of the Jack's entire pension after 30 years of employment. C. At time of retirement, did the Participant select a Joint and Survivor Annuity for the Alternate Payee in the event the Participant predeceases the Alternate Payee? - This benefit is not available to the Alternate Payee unless the Participant made an election for the benefit at the time of retirement. D. Should the Former Spouse receive a prorata share of any Cost-of-Living Adjustment? Cost-of-living adjustments are small incremental increases which keep a retiree in line with inflation. They are typically granted yearly, and often relate to the increase in the Consumer Price Index. These are increases in retirement benefits after retirement, and should not be confused with cost-of-living increases in salary received while still working. In some states case law has established that if a spouse is awarded a portion of the employee's pension, and that pension is subject to cost-of-living increases, then the spouse is also awarded a portion of such cost-of-living increases. However, in many cases this issue is not dictated by case law and should be decided by the parties during their settlement. E. Should the Alternate Payee share in any Early Retirement Subsidy or Supplements? Early retirement subsidies can come in many different forms, such as, being able to retire early, without penalty, due to the completion of a certain amount of years of service (30 Years and out) or a some type of bonus for retiring prior the normal date. These are just two examples. Many plans offer different types of subsidies or bonuses to their employees in order to make the idea of retiring early more appealing. Many plans do not have specific rules concerning these subsidies, but have places reserved within the plan guidelines in the event that such subsidies are ever needed in order to downsize their workforce. Ideally, this issue should be discussed in detail in the Judgment of Divorce, Property Settlement Agreement or other document which outlines the division of property. However, if such is not discussed in detail, various case law may set the standard followed by divorcing parties in different states. F. Length of time benefits will be paid to the Alternate Payee: Lifetime of the Participant (Shared Approach). This option is most commonly used when the Participant is currently in pay status. This answer provides the least amount of flexibility for the Alternate Payee. The Alternate Payee will not be allowed to start receiving benefits from the plan until the employee actually retires and begins receiving benefits for whatever reason. The benefits will be paid to the Alternate Payee on a monthly basis. After both parties begin receiving benefits from the Plan such benefits will be paid to the Alternate Payee for the Participant's lifetime. Upon the Participant's death, all payments to the Alternate Payee will cease. Section 13 If the answer to question # 11 is NO, please answer Questions #13 A thru G, otherwise skip to Question #14 A. Percent or Dollar Amount of Participant's benefits to be paid by the Plan to the Alternate Payee It is possible to award a percentage of the Participant's benefits (i.e. 50% of the portion of the benefit accumulated during the marriage) or a specific dollar amount each month (i.e. $750.00 per month). This information can be found in the Property (Marital) Settlement Agreement or Divorce Decree (i.e. 50%, 30%, 100% or $250.00 per month). This amount cannot be expressed as a lump sum. If a percent is chosen, how will the Marital Property Component be determined? There are two methods of distinguishing the portion of pension benefits earned by an employee during the period of marriage. The method which applies to a particular case is typically discussed in detail in the Judgment of Divorce, Property Settlement Agreement or other document which outlines the division of property. However, if such is not discussed in detail, various case law may set the standard followed by divorcing parties in different states. Option #1 - Frozen Benefit Approach: The Plan determines the employee's accrued benefit assuming that the employee terminated his employment on the Date the Marriage Ended. This benefit is referred to as the "frozen" accrued benefit. If the employee began his employment prior to the date of marriage, the Plan will calculate what part of the "frozen" accrued benefit was accumulated during the period of marriage. Option #2 - Coverture Approach: This approach compares the period of marriage to the total period of time an employee participates in his/her pension plan up until the date of retirement. This method is best explained using the following illustration: Jack and Jill were married for 10 years. Jack began his employment at the same time they got married, and worked for another 20 years after the marriage ended before retiring. Therefore, upon retirement, he will have been in the retirement plan for a total of 30 years. The formula for determining the portion of the pension accumulated during the marriage would be as follows:
Taking this a step further, if Jack and Jill were supposed to divide the portion of the benefits earned during their marriage equally, the formula would be as follows:
or, Jill's share equals 17% of the Jack's entire pension after 30 years of employment. B. Should the Former Spouse receive a prorata share of any Cost-of-Living Adjustment? Cost-of-living adjustments are small incremental increases which keep a retiree in line with inflation. They are typically granted yearly, and often relate to the increase in the Consumer Price Index. These are increases in retirement benefits after retirement, and should not be confused with cost-of-living increases in salary received while still working. In some states case law has established that if a spouse is awarded a portion of the employee's pension, and that pension is subject to cost-of-living increases, then the spouse is also awarded a portion of such cost-of-living increases. However, in many cases this issue is not dictated by case law and should be decided by the parties during their settlement. C. Should the Alternate Payee share in any Early Retirement Subsidy or Supplements? Early retirement subsidies can come in many different forms, such as, being able to retire early, without penalty, due to the completion of a certain amount of years of service (30 Years and out) or a some type of bonus for retiring prior the normal date. These are just two examples. Many plans offer different types of subsidies or bonuses to their employees in order to make the idea of retiring early more appealing. Many plans do not have specific rules concerning these subsidies, but have places reserved within the plan guidelines in the event that such subsidies are ever needed in order to downsize their workforce. Ideally, this issue should be discussed in detail in the Judgment of Divorce, Property Settlement Agreement or other document which outlines the division of property. However, if such is not discussed in detail, various case law may set the standard followed by divorcing parties in different states. D. Length of time benefits will be paid to the Alternate Payee: Lifetime of the Alternate Payee (Separate Approach). This option is most commonly used unless the Participant is already in pay status. This answer provides the most flexibility to the Alternate Payee without affecting the employee's share of the benefits. If the employee is eligible to retire at age 55, whether he/she plans on retiring or not, the Alternate Payee will be given the opportunity to begin receiving his/her share of the benefits at that time. Any reduction required by the Plan to account for the fact that benefits are being distributed at a date prior to the employee's normal retirement date will be deducted from the Alternate Payee's share of the benefit. The Alternate Payee has the ability to choose any allowable option presented by the plan and may elect the way benefits are paid to him/her. Choices may vary from a joint and survivor benefit (may not be with a new spouse), a guaranteed period benefit, a single life annuity or sometimes, a lump sum payment. Any adjustments necessary to convert the portion of the benefit awarded to the Alternate Payee to a benefit payable under one of these options will be made to the Alternate Payee's share of the benefits. After both parties begin receiving benefits from the Plan, the employee's death will have no affect on whether or not the Alternate Payee continues receiving benefits from the Plan. Once the Alternate Payee begins receiving benefits, benefits will be paid for the remainder of his/her lifetime. Any changes required by the plan in order to convert the benefit awarded to the Alternate Payee into a form which can be paid for his/her lifetime, will be applied to the Alternate Payee's share of the benefit. NOTE: It is important to remember that the employee's benefits are not affected in any way by the choice made under this question. E. Should the Alternate Payee be treated as the surviving spouse of the Participant, to the extent of the Marital Property Component, in the event the Participant dies prior to reaching retirement? This question addresses what is commonly referred to as a Qualified Pre-retirement survivor annuity (QPSA). By telling the plan that the Alternate Payee is to be considered the "surviving spouse" of the employee, for only the marital portion, the Alternate Payee's interest in the amounts awarded will be protected in the event the employee dies prior to the date the Alternate Payee begins receiving benefits. It is important to remember that the Alternate Payee will considered the "surviving spouse" of the employee for only the "marital portion." Any benefits accrued by the employee outside of the marriage will not be included in this benefit. Therefore, if the employee remarries, his/her new spouse may be the surviving spouse for all other benefits under the Plan. If the Alternate Payee is not designated as the surviving spouse of the Participant for the marital share, and the employee dies before the Alternate Payee begins receiving benefits under the Plan, the Alternate Payee will never receive any benefits from the plan. F. If the Alternate Payee predeceases the Participant prior to commencement of benefits, the Alternate Payee's portion of the Participant's benefit shall: Option #1 - Revert to the Participant If the Alternate Payee predeceases the employee prior to the date he/she begins receiving benefits, the benefits awarded to the Alternate Payee will revert to the employee. Option #2 - Be paid to the Alternate Payee's estate If the Alternate Payee predeceases the employee prior to the date he/she begins receiving benefits, the benefits awarded to the Alternate Payee will be paid to the estate of the Alternate Payee. 
Return to Request Forms
|
||||||||||||||||||||
|
||||||||||||||||||||
 | Our Pension Analysts Are Waiting... |
| ||
| Customer Support E-mail Form | Phone Toll-Free: 1-800-447-0084 | ||||
© Copyright 2001-2003, All Rights Reserved, Pension Appraisers, Inc.
Comments & Suggestions? or Recommend This Page to a Friend!
Created, Maintained & Hosted by
Divorcesource.com