Do you think that these are the best solutions?

Equitable Apportioning of Retirement Assets in a Divorce Settlement

By Howard Phillips


In order to equitably apportion retirement plan benefits/accounts that have been accumulated during a marriage, a divorcing couple and their advisors must learn the different varieties of retirement plans:

1. Defined contribution plans offer individual accounts for the participants, or...

2. Defined benefit plans create retirement benefits for the participants (sometimes shown as individual accounts in defined benefit plans, also known as cash balance plans).



In this essay, I'll focus on the primary issue which faces a fair apportioning of retirement assets accrued in a non-cash balance defined benefit plan. Assets payable from a defined benefit plan are calculated via a formula. That specific formula, typically, will merge the participant's income, the participant's plan service credits, a rate of benefit credit per each year of service credit, and the age at which the benefit is expected to begin.

For example, the plan formula for benefit calculation might be 1.5% of final average pay (the average of the highest 5 years in the last ten years of service) times the number of years of service credits, payable monthly from age 65. So, a participant with 20 years of service at 65 will have earned a monthly retirement benefit equal to 30% of final average annual pay divided by 12.

Therefore, the issue to be deliberated is:

Do we divide the retirement benefit earned as of the date of the complaint, or do we divide the retirement benefit earned (or projected to be earned) at 65, prorated for the relationship between the years of service credits during the marriage and the years of service credits earned (or projected to be earned) at 65?

It's not unusual to find that benefit projections properly prorated will result in a larger share for the non-participant spouse.

For example,

- Retirement Benefit earned at date of complaint = $1,000 per month
- Retirement Benefit projected at 65 = $3,000 per month
- Years of service credits earned during the marriage = 10
- Years of service credits projected at 65 = 20
- Retirement benefit to be divided (non-projected) = $1,000 per month
- Retirement Benefit to be divided (projected) = $1,500 per month

($3,000 times 10/20)

When a marital estate involves 1 or more retirement plans, the issues needing consideration are numerous. With guidance, each deliberation will result in a fair division of retirement plan benefits.




About the Author:



Related Posts:

  • Steps In Choosing Effective Wedding CoordinatorsBy Estelle Larsen Before you will be tying the knot, you should be preparing the things you would need for that. You will usually become a planner of those things for this event. So it will not be difficult for you, you can … Read More
  • Tips In Selecting Austin TX Wedding VenuesBy Patty Goff When one is planning to join with his life partner in matrimony, there is usually a ceremony that is organized to mark this auspicious occasion. This is a onetime event in every ones life and as such it is impo… Read More
  • Taiwanese Girls-Unlock The Dating Secrets!By Pete Stone If you want to know how to date Taiwanese girls and figure out if she is attracted to you or not, you come to the right place. We are going to share you with you some great tips. You have met a Taiwanese gir… Read More
  • How To Date Your Hong Kong GirlBy Zhang Li Today more and more Westerners are interested in dating Hong Kong girls. So what's next after you find your dream girl? Are Hong Kong Girls Easy? Not really... In most cases you need to work twice harder than … Read More
  • How To Select A Gown At Wedding Dress DenverBy Patty Goff It is the dream of every woman to wear a gown during her marriage ceremony. She desires to have a unique and stylish gown that stands out from others. However, this requires careful planning and budgeting depen… Read More

0 commentaires:

Enregistrer un commentaire