Summer 1994 Summer News Items re Pension in Divorce
By: Marvin Snyder
WALL STREET JOURNAL CAUTIONS ON QDROs. In page C16 on Friday, July 8, 1994, the Wall Street Journal reported on QDROs in an item entitled The Pension Bungle. It warned against trying to get a divorce settlement payment from a retirement plan without using a qualified domestic relations order. It alerts the former spouse to obtain such an order to prevent the employee-spouse from cleaning out all of a pension plan. It also flags taxes due on payments to each spouse from a pension plan.
PENSION ANALYSIS CONSULTANTS LISTS QDRO ISSUES. In this newsletter, a half-dozen of the most pertinent items are listed below for consideration when a qualified domestic relations order is used in a divorce case, assuming for convenience that Husband is the employee.
SOCIAL SECURITY ADJUSTMENTS. In many jurisdictions when an employee is in a position not covered by Social Security, such as an employee of the federal government in the Civil Service Retirement System, the value of the pension is reduced to compensate for the absence of Social Security. That is, a component value deemed to be equivalent to a hypothetical Social Security benefit is subtracted from the value of the total pension. Another approach that has been suggested is to value the Social Security benefit of the spouse when that spouse is in employment covered by Social Security. While Social Security itself is not attachable as marital property in divorce, its value may be utilized as may be appropriate by the court.