Getting More Than You Asked For...or Even Expected...In Your Divorce

Dividing retirement plan assets in a divorce is complicated enough when the plan assets accrue during the marriage. But what happens if some of the plan assets accrue after the divorce?

Examples:

A. The plan participant spouse enjoys significant compensation increases in his/her job after the divorce (which, of course, increases the pension benefit payable at retirement).

B. The plan participant spouse suffers a disablement after the divorce and the disability retirement benefit in the plan is much larger than the standard retirement benefit in the plan.

C. The plan participant spouse commences his/her benefit from a plan which is amended after the divorce to provide annual cost of living increases to the benefit payable.

Can the non-plan participant spouse claim a share of these pension benefit enhancements which evolve after the divorce? Although the answer may depend on state law, in most cases the answer is YES!

Why? Because most pension benefit formulas calculate the pension benefit using the participant’s final average compensation, his/her service at retirement, and the pension credit for each year of service. Since a portion of the pension benefit payable relates to service credits earned during the marriage, a pro-rata portion of the final benefit payable does relate to the marital years. A properly drafted QDRO (Qualified Domestic Relations Order) will handle the sharing of pension enhancements that evolve after a divorce.

This and other important information about handling retirement plan benefits in a divorce may be found in a recent publication entitled “Dividing Retirement Plan Assets in a Divorce” by Howard M. Phillips, which is available as a paperback and e-book on Amazon.com. More information is also available at DivorcePensionRights.com.
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Howard M. Phillips is a Fellow of The Society of Actuaries; a Fellow of The Conference of Consulting Actuaries; a Member and past Director of The American Academy of Actuaries; a past president and Director of The American Society of Pension Professionals and Actuaries; and is enrolled to practice by a Joint Board of the Departments of Labor and Treasury. He is the past president of Consulting Actuaries Incorporated, and is currently an independent consulting actuary. He has authored several published texts and articles, and is the author of “Dividing Retirement Plan Assets in a Divorce: A Concise, Comprehensive Pension Guide for People Getting Divorced”.