💔 OLDER Couples Planning a Divorce Have More Assets to Divide (AARP Article)

[Anonymous]

▶️‌To reply, click on reply button at bottom of this post. Enter your text. Click reply button again.◀️

READ comments, ADD comment.‌

🗣By John Waggoner AARP. February 14, 2020.

  ‌👉‌ Link to information👈 

Nicole 💔 (Late Life Divorce Forum)

[Anonymous]

READ comments, ADD comment.‌

🗣By John Waggoner AARP. February 14, 2020.

  ‌👉‌ Link to information👈 

Nicole 💔 (Late Life Divorce Forum)

---

[Tonster521]

@Anonymous Nicole, I think I can add value to John Waggoner's article by providing info regarding marital assets in a monthly pension plan (aka defined benefit pension plan). Although most employers have changed their retirement plan benefits from defined benefit (DB) to defined contribution (i.e., 401 K, etc.), there are still folks with marital assets in DB Plans whether such Plans are frozen or are current (participants are still accruing benefits). As you may not know, in many marriages, the most valuable marital assets are the employee spouse's pension rights. The Retirement Equity Act of 1984 (REA) which was a bipartisan Bill signed by President Reagan in August 1984 amended the Employee Retirement Income Security Act (ERISA). REA is a major piece of Federal legislation which affects State Domestic law concerning the division and disposition of private retirement benefits upon divorce. REA required Pension Plan Administrators (PA) to qualify State domestic relations orders issued in divorce and/or child support cases so that pension assets may be paid to a ex-spouse or child. Lawyers representing the parties were not aware of the many and various DB Plan provisions. So,it was challenging for lawyers to write a domestic relation order that a PA can "qualify" and create the Qualified Domestic Relations Order (aka QDRO) that allowed a DB Plan to pay someone other than the employee/participant pension benefits which, in the past, were protected by law (ERISA). Depending on the amount of accrued benefits and the length of the marital time, this could be a huge amount of money for the ex-spouse whether female or male. For example, the article mentions an increase in divorce between ages 55 and 64. I will use age 60 for a male participant who has an accrued monthly benefit of $2,000 or $24,000 per year. Lets assume the male was married the entire time that the benefit accrued. So, in my example, the female ex-spouse under REA is entitled to 50% of that accrued benefit or $1,000 per month. If the DB Plan provides for an immediate payment, the ex-spouse may start receiving pension benefits an an Alternate Payee even if the employee/participant is still working. Obviously, any accrued benefits after the divorce is 100% payable to the employee/participant. The parties may use a QDRO to negotiate a different division of marital pension assets. For example, the ex-spouse may negotiate a lump sum amount of the QDRO ($1,000/month) from the employee/participant instead of the DB Plan by waiving the QDRO in exchange for other assets such as cash, vacation homes, etc. The present value of $12,000/year for 25 years at 4% is about $187,465. The discount (interest) rate and life expectancy can also be negotiated so the parties may reach an agreement. In many cases, there are no other marital assets that can be exchanged. So, DB Pension Plans end up with many ex-spouses as Alternate Payees.Sounds complicated. It is. My best advice for folks with valuable marital private retirement assets is to use an attorney well versed with ERISA and REA. (especially QDROs). Please note that public retirement plans (federal, state, municipal,etc.) are not subject to ERISA and REA.  However, those public retirement plans may have similar provisions that address marital retirement assets. Although lengthy, I hope all readers find this info worthwhile.

BTW, thanks for your positive responses to my other complicated retirement and social security comments. I hope you and other readers can follow the math which, at times, is as clear as mud.