QdroDesk.com: State Retirement Systems

State Retirement Systems State, local government and municipality pension plans do not fall under the rules and regulations of the Employee Retirement Income Security Act of 1974, as amended, ("ERISA"). Therefore, most of these plans do not offer the same flexibility in structuring the payment of benefits to an Alternate Payee pursuant to divorce. The two primary issues inherent in these plans are as follows:

1.) Benefits are payable to an Alternate Payee when the Participant actually retires and begins receiving benefits from the Plan. Unlike those plans which are qualified under ERISA, it is not possible for a governmental plan to provide for payment to an Alternate Payee when the Participant reaches earliest retirement age. Therefore, if the Participant decides to stay employed beyond his normal retirement date, the Alternate Payee will not be eligible to receive payment until the Participant actually retires.
2.) Benefits are typically payable to the Alternate Payee for the lifetime of the Participant. In the event the Participant predeceases the Alternate Payee 2 weeks after retirement or 20 years after retirement, at such time, payments to the Alternate Payee from the Plan will stop. Under certain plans, a court order can provide that the Participant must choose a specific benefit option which provides a survivor annuity to the Alternate Payee. However, this survivor annuity can sometimes be in excess of the amount awarded to the Alternate Payee as a division of the marital or community property, and most of the time will preclude the Participant from providing survivor benefits to a new spouse.

Before negotiating a settlement of pension issues, it is important to investigate the possibilities provided for division of benefits under the particular Plan in question. It is also important to remember that not all state and local governmental plans allow court orders distributing benefits to an Alternate Payee.