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The Iowa Public Employees Retirement System (IPERS) Plan is a defined benefit plan. The member’s benefit is defined and it’s calculated using a formula. The member’s IPERS benefit grows as the years of service and salary increase. He or she receives a lifetime, monthly benefit at retirement. Dividing such a benefit can be tricky, and involves more complexity than dividing accounts maintained under defined contribution plans, such as IRAs or 401(k) plans. IPERS is a governmental pension plan exempt from ERISA, the federal law that governs the division of pension benefits for private sector plans.
A Qualified Domestic Relations Order (QDRO) is a special court order that individuals obtain in divorce that specifies the division and distribution of a pension. IPERS’ QDRO requirements are different from those of ERISA-mandated plans. An IPERS QDRO must be a final order. If an order has not been signed by a duly appointed judicial official and filed in accordance with applicable laws and procedures, the order may be a domestic relations order, but it will not be an IPERS QDRO. An IPERS QDRO must satisfy the requirements of Iowa Code section 97B.39 and 495 IAC 16.2 (97B).
The IPERS retirement benefit depends on four factors: the member’s age at retirement, quarters of covered employment, final average salary, and classification as a regular or Special Service member. IPERS retirement benefits are paid as a monthly, lifetime annuity. Learn more by reading our FAQs below.
A. A QDRO is not always necessary in situations of divorce. If the spouses agree to divide other marital property equitably which may offset the value of the retirement account, then IPERS benefits may not need to be divided and there may not be a need for a QDRO.
A. IPERS provides IPERS benefits to the retiree and the alternate payee according to the terms of the QDRO.
A. IPERS does not provide lump-sum present value calculations of a member’s accrued retirement benefits. The spouses may agree to the value of pension benefits that they agree to treat as marital property, or the member may obtain a present value calculation from an independent expert.
A. IPERS will accept reasonable requests for plan information to use in preparing these calculations.
A. IPERS only accepts a shared payment method for dividing a member’s benefit. Under the shared payment method, the actual benefit payments made to the member (and if applicable, payments to beneficiaries) are split. The alternate payee does not receive any payments until the member begins to receive payments. If the member is already receiving benefits, the alternate payee may begin to receive the payee’s share of the benefit after the domestic relations order is accepted by IPERS as a QDRO. IPERS does not calculate the value of the member’s account and divide it into two separate accounts.
A. No. The benefits are shared; accordingly, a QDRO cannot give an alternate payee the right to receive a portion of the member’s accrued retirement benefit at a time and in a form different from that elected by the member. Since benefits are shared, when writing a QDRO, consideration should be given to death benefits available under the various payment options available. The IPERS model QDRO uses the “service factor” method to determine the percentage of the pension benefit that should be considered marital property. In this routine, a coverture fraction comes into play. The period of time the member participated in the plan while married is the numerator over the total time period used in calculating the benefits, usually his or her employment.
A. If a member is still legally married, he or she cannot change beneficiaries without the written consent of the current spouse. A member needs his or her spouse’s consent to change the beneficiary before the divorce. If the spouse agrees, the member can change the beneficiary. Otherwise, he or she must wait until the divorce is final.
After a QDRO that divides death benefits has been filed and qualified by IPERS, the member may be able to change beneficiaries by completing a new Enrollment/Beneficiary Designation form. He or she would first designate the alternate payee as a beneficiary and indicate that benefits are being paid according to the terms of the QDRO. Then, he or she would designate other beneficiaries for the remaining benefits. However, a member may be unable to change beneficiaries depending on the terms of the QDRO.
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Read Our Article in thePA Family Lawyer
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