Government Plans

Friday, December 30th, 2011

Not all retirement plans are subject to division by QDRO, as defined by the Internal Revenue Code §414(p) and ERISA §206(d). Included in those exempt plans are Military Retired Pay, Civil Service Retirement System (CSRS), Federal Employees Retirement System (FERS), Thrift Savings Plan for Federal Employees (TSP), and the Railroad Retirement Board. These plans are still considered divisible marital property by the State courts, and can usually be divided by one of several alternative types of court orders specifically suited for the particular type of plan.

Wendy Drefahl, President of WFA Econometrics Corporation, is the co-author of “A Primer on Dividing a Military Pension” as published in the August, 1999 issue of the Wisconsin Lawyer, a Wisconsin State Bar Publication. The article addresses the division of military retirement benefits via court order pursuant to divorce. For purposes of establishing certain criteria required by the Military to be in the Judgment, we strongly recommend consultation with WFA Econometrics prior to the divorce.

Please note that most city, county and state retirement plans are also exempt the Internal Revenue Code §414(p) and ERISA §206(d). As a result, many city, county and state retirement plans cannot be divided via QDRO. It is rarely found when a municipal or state plan can be divided with a different type of court order, however these types of court orders are not consistent with QDRO statutes. While a few states have constructed model QDROs that establish an equitable division of benefits, most others do not necessarily guarantee the non-participant spouse an independent interest in his or her awarded benefit. For most municipal and state plans, which do not honor any type of court order, a deferred payment arrangement between the parties may be necessary. WFA has numerous solutions and suggestions regarding the division of these plans. Please contact the WFA office for further information on dividing governmental retirement plans.