Retirement benefits are often the largest of the various assets which must be divided in a dissolution process. And, not surprisingly, splitting them can be a highly complicated process. Retirement plans are not all created equal. There are many types, each with unique provisions, requirements, and fine print . Indeed, there are state pension plans, private pension plans and federal pension plans.
In order to divide retirement plans successfully and to preserve each party’s interest in a particular plan, there is a multistep process which must be followed with extreme care. In fact, the type of retirement plan will generally dictate that procedure.
Generally, there are three basic steps required to effectively complete the division of retirement benefits.
1. It is very important to first identify the type of plan. There are federal pension plans that require specific division orders. If division orders are incorrectly prepared, the consequences can be grave. The nonemployee spouse can lose his/her interest in the retirement monies.
2. The second step is to identify the community property interest in the plan. Generally, both parties will have an interest in retirement benefits that accrued during the time from the date of marriage to the date of separation. Most law firms will hire an actuarial firm to calculate each party’s financial stake in the plan.
3. Finally, the amounts will be distributed. There are various ways that the money can be taken by the nonemployee party, depending on the plan and the nonemployee’s choice.
If a retirement plan is not divided correctly it is often too late to remedy the error because the retiring employee party may have passed away, the retirement money has been moved, or the court has lost jurisdiction. It is essential to speak to a divorce attorney in Pleasanton, CA or Oakdale, CA to ensure that your interest in your spouse’s retirement plans is well protected.