On March 15, 2018 Attorney Erwin Kratz presented a webinar which detailed practical approaches to solving the various complications that can arise when dividing defined contribution plan accounts, including approaches to dealing with the pre-marital money problem and opportunities presented when offsetting accounts against each other. In this Webinar we addressed:
Where and how to get an accurate account balance on the date of marriage (DOM) when faced with the pre-marital money problem
Adjusting the DOM balance for earnings through the end of the marital community, including how to estimate earnings on pre-marital money:
based on the way the account was invested on the date of marriage or on the date of division, or
using broad proxies (such as the S&P 500 index, target date retirement funds, and the DOL’s VFCP Online interest calculator)
How to determine which account your client is best off taking and which they are best off giving away when offsetting the balance in one account against another.
On November 9, 2017 attorney Erwin Kratz presented a webinar detailing the various challenges in dividing military retired pay after the 2017 NDAA Amendments, especially in relation to the commonly used Van Loan formula.
The 2017 National Defense Authorization Act changed the definition of “disposable retired pay” in 10 U.S.C. 1408(a)(4) in a way that requires use of monthly retired pay as of the date of divorce, rather than as of retirement, for purposes of dividing military retired pay.
This webinar covered:
Why (and how) the NDAA modifies, but does not completely kill, the Van Loan formula when dividing military retired pay
Issues particular to the following situations:
Pre-retirement v. post-retirement divorce
Pre-marital service v. no pre-marital service
The Former Spouse will get less than 50% of the total disposable retired pay
The Member entered service before v. after 9/1/1980
Reserve v. Active duty retirement
Promotions made within 3 years of the date of service in the divorce
The article explains how it is critical to understand the features of each retirement benefit, to can get your fair share of this important community asset. The first step is to correctly identify the type of retirement plans involved. The article details issues to consider when dividing benefits in the three broad types of retirement plans-
Defined Contribution Plans (Both private and governmental)
In this case, the ex-wife’s attempt to institute a QDRO two months after the participant (her ex-husband) had died was denied by the plan administrator (Fidelity) several times. The Plan Administrator (Fidelity) advised the ex-wife in writing that it had determined that the QDRO could not be qualified as drafted. The letter explained that the ex-husband’s benefit had terminated with his death and the post-retirement survivor annuity that had vested in the participant’s subsequent spouse could not be reassigned. The lesson is to not delay getting your QDRO entered, or you might lose the benefit entirely.
In addition, in this case the ex wife was barred by the one-year statute of limitations from prosecuting an action for benefits under ERISA (which was her attempt to get around the denial of the QDRO). While ERISA does not have it’s own statue of limitations regarding benefits claims, federal courts can apply similar limitation periods in the relevant state to ascertain if the claim has been brought in a timely matter. In this case, the Third Circuit court determined a one-year limitation period, referencing the Delaware law for employment disputes, applied.
The court determined that the ex-wife’s claim for benefits accrued when she was first notified by Fidelity on April 21, 2010 that her claim had been denied. Even if one considered the ex-wife’s claim to accrue on January 17, 2013 (the date of Fidelity’s last letter confirming that her claim was denied), the ex-wife’s pro se action would still have been 2 months past the end of the limitations period, since her ERISA action was not filed until March 24, 2014.
Registration is closed on the first three presentations in our web CLE conference “Tips and Traps When Dividing Retirement Benefits” on August 31, September 15 and September 30, as 8 participants have registered for each session. We are happy to have added a fourth presentation at noon on Friday, October 14, 2016. Attorneys can register for that session here.
This web conference will discuss tips and traps family law attorneys should be aware of when negotiating the division of retirement plan assets, including solutions to the unique challenges presented by:
The type of retirement plan you are dealing with – whether a defined contribution plan, defined benefit plan, private or governmental, tax qualified or non-qualified plan
Accounting for pre-marital account/benefit accumulations
The effect of post marital service and compensation increases
Accounting for outstanding loans in defined contribution plans
Avoiding surprises caused by delayed distribution provisions
Awarding pre-retirement death benefits
Awarding post retirement survivor benefits
Allocating the cost of providing survivor benefits
Registration is limited to no more than 8 attorneys. This size limit is deliberately intended to facilitate discussion among the attendees, so please bring your questions with you or email them to me before the conference so I can be sure we address them.
We will email all attendees an agenda and written materials before the conference. After the conference we will email all attendees a Certificate of Attendance.
The State Bar of Arizona does not approve or accredit CLE activities for the Mandatory Continuing Legal Education requirement. This activity may qualify for up to 1.0 hours toward your annual CLE requirement for the State Bar of Arizona, including 0 hour(s) of professional responsibility.