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PERA is a qualified defined benefit public pension plan covered under § 401(a) of the Internal Revenue Code (IRC). The PERA retirement plan is a governmental plan for purposes of 29 USC § 1002, and is, therefore, exempt from the provisions of the federal Employment Retirement Income Security Act f 1974 and the Retirement Equity Act of 1984. The Public Employees Retirement Act, NMSA § 10-11-1 et seq. and Title 2, § 80 of the New Mexico Administrative Code contain the plan language.
Defined benefit plans pay benefits based on a formula that considers the age of the member, the number of years of service and the final average salary. Unlike a 401(k), which is valued based on the total account balance, in a defined benefit plan, a member’s account balance does not determine his future monthly benefit. Learn more by reading our FAQs below
Consists of Two Retirement Plans:
A. A court may decide that a former spouse, who is called a co-payee, receives a portion of the member’s benefits. New Mexico is a community property state. PERA benefits are considered community property, and they and valued and divided in a divorce.
A. No. Unless the member spouse terminates his or her employment, a co-payee may receive his or her share of the member’s PERA account only when the member retires. Otherwise, both payee and co-payee receive benefits only when the payee retires.
A. Couples who divorce, depending on their financial situation and circumstances, sometimes trade retirement benefits for other marital property, so that payee retains ownership of his or her state pension.
A. NO. PERA provides a monthly history of the payee’s account balance. For an appraisal of the present value of a pension, the payee must consultant a private actuary, accountant or financial professional.
A. No. When the payee retires with a monthly benefit, the co-payee also receives a monthly benefit. The duration of the payments to the co-payee depends on the terms of the order dividing the benefit and the form of payment the payee elects. Option A pays benefits to both the payee and co-payee for he duration of the payee’s life. Option B or C, pays benefits only for the life of the payee. Option B or C makes the co-payee the survivor beneficiary, and the co-payee receives benefits for life.
A. Yes. The percent of the community property interest paid to the co-payee reduces the payee’s monthly benefit.
A. Either the spouses agree to an amount or the judge determines it.
A. No. The co-payee receives benefits only when the benefits become payable to the payee. PERA pays benefits only when a member meets the requirements to retire and applies for a pension, or when a member terminates his employment and requests a refund.
A. It depends. The member must comply with the election and form of payment specified in the court order dividing benefits. If the order does not address these, he or she is free to elect any form of payment and designate a survivor beneficiary.
A. It depends on the language or the order dividing the PERA benefits. If the co-payee dies before payments begin, normally his or her interest in the gross pension benefits revert to his or her estate. If the member dies prior to retirement and a survivor pension is payable, the co-payee receives his or her share. If not the survivor pension is payable, the co-payee receives his or her share of a refund of accumulated contributions.
A. Any benefit increases apply to the co-payee’s share of the benefit
A. Yes. Federal and state income tax must be paid on the taxable portion of the benefit. PERA can withhold state and federal income tax if the recipient requests it. In January, the retirees and co-payees receive a 1099-R.
A. No. PERA requires written approval by the Office of General Counsel before a court-endorsed order dividing retirement benefits can be administered. If PERA receives a court order signed by a judge that does not comply with New Mexico law or PERA rules, the patties must return to court to modify the order.
A. Yes, but it requires another court order to allow for any modifications, and after the first payment is made, law bars certain modifications.
A. Yes, provided all the New Mexico requirements for a valid order are in place.
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