Your Financial Future:
7 Key Questions You Need To Ask BEFORE Your Divorce Is Finalized
To make an intelligent decision on how to divide a pension, find out what kind of pension it is, how it is funded, and how it pays out.
Does he have more than one pension or retirement plan from his current or previous job?
He may be eligible for (or may already be receiving) retirement benefits from any current or previous job. Your settlement must refer to each plan in order for you to get benefits from each. He may, for example, have a traditional pension plan and also a 401(k) plan. Both types of plans can be divided at divorce.
Has he worked long enough to earn a legal right to the pension?
Most plans now provide benefits after 5 years of work. However, if your husband has worked for the federal, state, or local government, you will have to find out about the different rules that apply to those pensions.
Do you know how much he has earned or "accrued" in pension benefits under each plan?
You or your attorney can write to the pension plan administrator to get a copy of his most recent annual benefit statement. Or ask the court to order the plan to furnish one. You should also request a summary plan description (SPD), which will describe the key features and rules of the plan. The SPD will tell you if the plan provides for cost of living adjustments.
Do you need to have the benefit valued?
Sometimes the pension is worth more or is more complicated than the amount that appears on the annual statement. You may want to have a pension actuary or an accountant calculate the lump sum present value of the monthly pension.
Do you know what information needs to be in the court order, decree, or property settlement before the pension plan will pay the benefits directly to you?
The court order required to divide a company pension plan is a Qualified Domestic Relations Order (QDRO). As soon as divorce proceedings start, have your attorney contact your husband’s plan administrator for the QDRO procedures. Each pension plan is different and many companies have developed their own QDRO forms to make it easier for the court and the ex-spouse.
Does the order clearly specify what amount is to be paid to you?
The amount can be stated as a fraction or percentage of the pension. It can be based on the total benefit earned as of the separation date, the date of divorce, the date he is eligible for retirement, or the date he retires.
Does the order provide for survivor benefits, so that your benefits can continue if your ex-husband should die first?
Traditional, company pension plans provide a survivor’s benefit of 50% of the amount the husband received. Ex-wives can receive these benefits, but they must be specifically included in the order, or the benefits may stop when the ex-husband dies.
by Anne E. Moss, J.D., author of Your Pension Rights at Divorce