Posts tagged ‘California QDRO’

Valuation Dates for QDROS: A Common Mistake in Marital Settlement Agreements

QDRO valuation date: QDRO Helper California QDRO attorneysWHAT IS A “VALUATION DATE” FOR QDRO PURPOSES?

A QDRO (Qualified Domestic Relations Order) is a court order that divides retirement benefits due to divorce.  The valuation date for QDRO purposes is the date as of which the funds are to be divided.  For example, in a QDRO for a 401(k) plan awarding 50% to the non-employee spouse with a valuation date of September 30, 2011, the plan will look at the Participant’s account balance on September 30, 2011 multiply the account by 50% in order to determine the non-employee spouse’s share.  The plan administrator will not look at the current account balance at the time of actual division of the account, but will look at the account balance as of the valuation date.

VALUATION DATE PROBLEMS IN QDROS

Unfortunately, an issue which often makes the QDRO process more difficult is the lack of a valuation date in the parties’ Marital Settlement Agreement (“MSA”).  A missing valuation date can lead to litigation at a later date.  Your MSA should always state the date as of which the benefits are to be divided, or reference a date which is known and agreed to by the parties, i.e. “Wife is awarded 50% of the account balance as of the date of separation” or “Husband is awarded 50% of the account as of December 15, 2012.”  Absent a specified date, one party may argue for the date of separation to be used, while another party may argue that the date of dissolution should be used.  As can be imagined, the value of retirement benefits could vary greatly depending on the valuation date chosen, particularly since the date of separation and the date of dissolution can be more than a year apart.  Other potential valuation dates are the date that a divorce petition is filed, the date the MSA was signed.

Typically, in California, the parties’ date of separation is viewed as the date that the community interest in the asset stops accruing. [In re Marriage of Bergman, 168 Cal. App. 3d 742 (1985)]  However, other states view community property differently.  For example, in Arizona, the accrual of community property typically terminates upon the service of the divorce petition on the other party; in Nevada, community property usually terminates upon the date of divorce.

Valuation dates are also an issue because often with QDROs for defined contribution plans, gains and losses are included in the alternate payee’s share from the valuation date to the date that the plan administrator actually segregates the account.  Therefore, the further back the valuation date is from the date of account segregation, the greater the potential change in value of the alternate payee’s benefits.

If the parties are awarding the non-employee spouse a flat dollar amount, then the valuation date should be the date of account segregation by the plan administrator and the QDRO should specify that the parties do not intend for any gains or losses to be included in the alternate payee’s award.

Provisions should also be made in the event that the retirement plan only allows certain valuation dates.  For example, some plans only allow valuation dates that are the last day of a month, or have valuation dates that can only be days that the New York Stock Exchange allows trading (i.e. excludes weekends or holidays).  Ideally, the MSA should provide a valuation date and then also state “or the nearest valuation date under the Plan”.

The best practice is to ensure that the MSA clearly states the valuation date for dividing retirement assets and also allows for variations due to the valuation dates allowed under the terms of the retirement plan.

QUESTIONS ABOUT VALUATION DATES IN QDROS?

If you have questions about valuation dates in QDROs or if you would like to assistance with your MSA language or drafting your QDRO, please call QDRO Helper at 619-786-QDRO (619-786-7376) or email us at info@qdrohelper.com.

 

DISCLAIMER: ADVERSTISEMENT.  Any legal information on this blog has been prepared by QDRO Helper for informational purposes only and is not legal advice and does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. The information provided is intended to comply with Rule 1-400 of the California Rules of Professional Conduct. Any links in this website are included only to help you locate other Internet resources that may be of interest to you; QDRO Helper is not associated with any such links. The transmission and receipt of information contained on this website via the Internet or e-mail or in any other manner does not constitute or create an attorney-client relationship, and you should not act on the information contained herein without obtaining legal counsel. QDRO Helper has a strict policy of entering into attorney-client relationships with its clients only though the execution of a written fee agreement acknowledged by QDRO Helper. As such, you should not send QDRO Helper any confidential information in response to this web page until such a relationship is established and expressly acknowledged by QDRO Helper.

KCERA DROs: Dividing Kern County Employees’ Retirement Association Benefits in Divorce

QDRO Helper: Bakersfield QDRO Attorneys - Kern County QDRO

KCERA & DIVORCE – GENERAL INFORMATION

Membership in the Kern County Employees’ Retirement Association (KCERA) is automatic for any employee who is appointed to a permanent position that meets certain hourly requirements.  Membership in KCERA begins on the first day of the payroll period following the employee’s date of hire, and every member is either a safety member or general member.  KCERA is a defined benefit plan that is administered by the Board of Retirement.  Like other types of assets acquired during marriage, KCERA benefits are subject to division during divorce.  The division of these benefits is accomplished by a special court order called a Domestic Relations Order or DRO.   Kern County also offers the Kern County 457 Deferred Compensation Plan to its employees; that plan is not addressed in this article, but the attorneys at QDRO Helper can also assist with the division of those deferred compensation plan benefits.

KCERA JOINDER REQUIREMENT & EFFECT OF JOINDER

Joinder is a legal process that names a third-party claimant to the parties’ divorce case.  In order for KCERA to respond to a DRO, pursuant to California Family Code §2060(b), a joinder must be filed and served on KCERA.  Joinder is the first step in obtaining an Order to divide Kern County Employees’ Retirement Association benefits.    Once the joinder is served on KCERA, KCERA will place a hold on the member’s account.  No funds will be paid out from the member’s KCERA account until the plan receives a DRO or court order that specifies the division of the benefits.  Until receipt of the joinder and DRO, the member will not be able to retire and begin receiving payments.  Further, if the parties divorce after retirement, as soon as KCERA is served with the joinder documents, KCERA will reduce benefit payments to the member by 50% until a court-approved DRO is received.  At that time, if the member was underpaid, the member will issue all underpaid benefits to the member.  Your divorce attorney may have already filed a joinder for you, if not, QDRO Helper offers joinder services for a reasonable $200 Flat Fee.

OBTAINING INFORMATION ABOUT KCERA BENEFITS

Individual retirement records are confidential; however, they can be disclosed to the member or to another person authorized by the member in writing to receive the records.  The records can also be released with the appropriate court order or subpoena.  At the member’s request, KCERA can provide an estimate of the community property share of the member’s account.  A request for that information should include the member’s name and social security number, the nonmember’s name, social security number and date of birth, the parties’ dates of marriage and separation.  KCERA can also provide information about the member’s date of hire and date of membership in KCERA.

DIVISION OF BENEFITS

Usually, the nonmember spouse is awarded one-half of the community property interest in the retirement benefits pursuant to the formula described in Marriage of Judd (1977), 68 Cal.App.3d 515, 522, also known as the Time Rule Formula.  You can read more about the Time Rule Formula here.

KCERA, unlike some other county government plans, does not currently offer the option to create a separate account on behalf of the nonmember spouse.  Instead, the nonmember spouse will receive a portion of each payment made to the member.   Since each payment to the nonmember spouse is only made when a payment is made to the member, a lifetime benefit to the nonmember spouse is not guaranteed and should not be assumed.

EFFECT OF NONMEMBER’S DEATH & MEMBER’S DEATH

If the nonmember spouse dies before payments commence under the DRO, the payments that would have been made to the nonmember spouse will instead be paid to the nonmember spouse’s estate.  If the member dies before retirement, the nonmember spouse will receive a pro-rata share of any survivor’s benefits which the plan is obligated to pay.

QUESTIONS ABOUT KCERA DROs?

If you have questions about the division of KCERA benefits, or if you would like to get started on your KCERA Domestic Relations Order today, please call QDRO Helper at (619) 786-QDRO / (619) 786-7376.  You can also request a new client package by email by clicking here.  We proudly serve clients who live in Bakersfield and throughout California – no in-office appointments required.

 

DISCLAIMER: Any legal information on this blog has been prepared by QDRO Helper for informational purposes only and should not be construed as legal advice. The material posted on this website is not intended to create, and receipt of it does not constitute, an attorney-client relationship, and readers should not act upon it without seeking professional counsel. Note also that sending an e-mail to QDRO Helper does not create an attorney-client relationship, and none will be formed unless there is an express agreement between the firm and the individual. We strongly advise against sending confidential or privileged information to QDRO Helper until you can establish such a relationship.

 

VCERA DROs: Dividing Ventura County Employees’ Retirement Association Benefits in Divorce

QDRO Helper - Ventura County QDRO AttorneyVCERA & DIVORCE – GENERAL INFORMATION

Employees of Ventura County are members of the Ventura County Employees’ Retirement Association (VCERA).  Like other money or assets acquired during marriage, VCERA benefits are subject to division during divorce.  The division of these benefits is accomplished by a special court order called a Domestic Relations Order or DRO.

VCERA JOINDER REQUIREMENT

Joinder is a legal process that names a third-party claimant to the parties’ divorce case.  In order for VCERA to respond to a DRO, a joinder must be filed and served on the plan.  Joinder is the first step in obtaining an Order to divide Ventura County Employees’ Retirement Association benefits.  Your divorce attorney may have already filed a joinder for you; however, if needed, QDRO Helper also offers joinder services for a $200 Flat Fee.

DIVISION OF BENEFITS

Typically, the nonmember spouse is awarded one-half of the community property interest in the retirement benefits.  There are two basic methods of division: i) a segregation of account method, where a separate account will be established by VCERA on behalf of the nonmember and ii) a shared method, where the nonmember spouse receives a portion of each payment made to the member.  The shared method is the only option that can be utilized if the member has already retired.  If the member is not retired, either the segregation method or shared method can be used.  Under the segregation method, the nonmember has a variety of distribution options:

  1. he/she may request a refund of contributions and interest (which can be “rolled over” into another qualifying plan), or
  2. he/she can commence receipt of a monthly retirement benefit if eligible, or
  3. he/she may maintain the account by electing a deferred retirement until such time as he/she elects either a refund of contributions and interest or becomes eligible to receive a monthly retirement benefit.

If a member is not vested, then the nonmember spouse can only utilize option 1 above.  When the nonmember is paid a refund, the member will have five years to sign a contract that will allow the member to redeposit all contributions withdrawn, plus interest, in order to regain the service credit awarded and paid out to the nonmember spouse. The contract may be satisfied with payroll deductions over the course of five consecutive years (one hundred and thirty consecutive biweekly payments).

NONMEMBER’S DEATH

The nonmember spouse has the right to name a beneficiary, or beneficiaries, for the nonmember’s VCERA benefits.  If the nonmember dies before the effective date of retirement, his/her accumulated contributions shall be paid to his/her designated beneficiary.

If the nonmember dies after the effective date of his/her retirement, if the total retirement allowance income received by the nonmember during his/her lifetime was less than his/her accumulated contributions, his/her designated beneficiary shall be paid in one lump-sum the difference between the total contributions and the total retirement allowance income.

QUESTIONS ABOUT VCERA DROs?

If you have questions about the division of VCERA benefits, or if you would like to get started on your Domestic Relations Order today, please call QDRO Helper at (619) 786-QDRO / (619) 786-7376.  We proudly serve clients throughout California – no in-office appointments required.

DISCLAIMER: Any legal information on this blog has been prepared by QDRO Helper for informational purposes only and should not be construed as legal advice. The material posted on this website is not intended to create, and receipt of it does not constitute, an attorney-client relationship, and readers should not act upon it without seeking professional counsel. Note also that sending an e-mail to QDRO Helper does not create an attorney-client relationship, and none will be formed unless there is an express agreement between the firm and the individual. We strongly advise against sending confidential or privileged information to QDRO Helper until you can establish such a relationship.

Gillmore Rights and Your California QDRO

California QDRO Gillmore Rights QDRO HelperWHAT ARE GILLMORE RIGHTS?

Often an employee wants to continue working past her earliest retirement age.  If the employee is divorced and her former spouse wants to start receiving benefit payments based on his community interest in the retirement plan, Gillmore rights allow him to start receiving his share of benefits before his former spouse actually retires.  Specifically, these rights give an non-employee former spouse the ability to receive his/her community property share of the employee former spouse’s benefits at the earliest date on which the employee would be eligible to retire, regardless of whether the employee actually retires at that time.  This option to commence benefits at the earliest retirement date is governed by federal law 29 USC §1056(d)(3)(E)(i); Internal Revenue Code §414(p)(4);  and a California court case Marriage of Gillmore (1981) 29 C3d 418.  These rights get their name from the Marriage of Gillmore case where the court determined that an employee who continues working past the date of retirement eligibility can be ordered to pay his/her former spouse his/her community share of benefits.

WHAT IS A GILLMORE ELECTION?

A “Gillmore Election” occurs when a non-employee spouse makes a motion in court to demand payment of benefits from the plan or the participant.  (The process is started by filing form FL-300.)  However, if a Qualified Domestic Relations Order is already in place granting the non-employee spouse a separate interest in the plan, the non-employee former spouse can simply contact the plan and commence receipt of benefits.

OTHER CONSIDERATIONS REGARDING GILLMORE RIGHTS

A Gillmore election is irrevocable.  Therefore, if the non-employee former spouse commences benefits before the employee actually retires, the non-employee will not be entitled to share in any future benefit increases due to the employee’s continued service, increased age, or increased salary.  The non-employee spouse will still be entitled to cost-of-living adjustments.

It is possible for parties to waive Gillmore rights explicitly as part of the divorce proceedings.  However, parties should be aware that if they choose to divide retirement benefits by the Time Rule formula instead of a separation of account method, this can be construed as an implicit waiver of Gillmore rights, unless the QDRO states otherwise.  Many plans, such as CalPERS, CalSTRS, and government plans require language in their Domestic Relations Orders stating that payments to the non-employee will not commence until the member actually retires and begins receiving payments.  This is with regard to the plan and payments made directly by the plan only; a non-employee spouse could still seek court action against the former spouse to receive payments directly from the still-working employee.

QUESTIONS ABOUT YOUR CALIFORNIA QDRO OR GILLMORE RIGHTS?

If you have questions about Gillmore rights, dividing retirement benefits due to divorce, or if you would like to get started on your QDRO today, please call QDRO Helper at 619-786-QDRO (619-786-7376).  Alternatively, you can email info@qdrohelper.com and request a new client package.

 

DISCLAIMER: Any legal information on this blog has been prepared by QDRO Helper for informational purposes only and should not be construed as legal advice. The material posted on this website is not intended to create, and receipt of it does not constitute, an attorney-client relationship, and readers should not act upon it without seeking professional counsel. Note also that sending an e-mail to QDRO Helper does not create an attorney-client relationship, and none will be formed unless there is an express agreement between the firm and the individual. We strongly advise against sending confidential or privileged information to QDRO Helper until you can establish such a relationship.

619-786-QDRO / 619-786-7376 (phone) * 619-345-4687 (fax) * 4455 Murphy Canyon Rd. Ste. 100, San Diego, CA 92123 * © The Law Office of Madeline L. Hill, d.b.a. QDRO Helper* All rights reserved.*   ***QDRO Helper is an efficient and affordable service that provides attorney drafted QDROs to individuals and family lawyers throughout California, including San Diego, Los Angeles, Bakersfield, Anaheim, Riverside, San Francisco, San Jose, Oakland, Fresno, and Sacramento. QDRO Helper offers a $500 flat fee QDRO option.*** THE MATERIAL CONTAINED ON THIS WEBSITE MAY BE CONSIDERED AN ADVERTISEMENT IN CALIFORNIA. QDRO Helper’s attorneys are only licensed to practice in the state of California. Any legal information on this website has been prepared by QDRO Helper for informational purposes only and should not be construed as legal advice and does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. The content of this website is intended to comply with Rule 1-400 of the California Rules of Professional Conduct. The material posted on this website is not intended to create, and receipt of it does not constitute, an attorney-client relationship, and readers should not act upon it without seeking professional counsel. QDRO Helper and its attorneys have a strict policy of entering into attorney-client relationships with its clients only though the execution of a written fee agreement acknowledged by QDRO Helper. Sending an e-mail to QDRO Helper does not create an attorney-client relationship, and none will be formed unless there is an express agreement between the firm and the individual. We strongly advise against sending confidential or privileged information to QDRO Helper until you can establish such a relationship. To the extent the State Bar rules requires us to designate a principal office and/or single attorney responsible for this site, QDRO Helper designates Madeline L. Hill as the attorney responsible for this site.
Wordpress Themes
Scroll to Top