16.06 Common Pension IssuesOnce divorce counsel has identified whether the pension plan in question is an ERISA or non-ERISA plan, and whether immediate offset or deferred distribution is the best approach in the particular case, a number of additional issues must be considered. 1These issues include:
1 If the pension is defined contribution and counsel uses a deferred distribution approach, these factors are not relevant. The nonemployee spouse receives a lump sum payment either as an outright cash payment or a rollover into his or her IRA. The nonemployee spouse receives a specific dollar amount that he or she can reinvest. Counsel should consider interest on the lump sum amount if payment is not received in a timely fashion. Does the lump sum consist of cash or securities? If securities, pick high tax basis securities to minimize future taxes, pick undervalued stock and securities purchased with plan contributions which have already been taxed. Reprinted with permission. 2007, Aspen Publishers, Inc., from Valuing Specific Assets in Divorce, edited by Robert D. Feder. |
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