Divorce and Federal Employee Retirement
A few months ago, Debbie wrote asking about her interests, as the spouse of a federal employee, in her husband’s federal employee retirement benefits (retirement annuity). Her husband claimed she couldn’t get any of his federal employee annuity as federal law didn’t permit its division. He was mistaken.
Unlike private pension plans, the Federal Employee Retirement System (FERS) and the Civil Service Retirement System (CSRS) are born totally from federal laws and regulations. In a divorce, the division of a FERS or CSRS benefit is done by specific language in a court order, not by a qualified domestic relations order. There are very strict and specific deadlines that must be met by anyone wanting to receive a portion of the employee’s annuity. In addition, there are certain ancillary benefits a divorced spouse could receive only if the court order specifically addresses these benefits.
The administration of FERS and CSRS is handled by the Office of Personnel Management (OPM). A court order acceptable for processing is required by OPM before it will do anything with a federal employee’s retirement annuity.
The court order can divide the retirement annuity by a specific dollar amount or by a specific percentage, up to 100% of the retiree’s net annuity. If the divorced spouse wants to share in any future cost of living allowances (COLA), the court order must provide for it, particularly if the division of the retirement benefit is expressed in a dollar amount. A percentage division of the benefit generally includes COLA’s. In either event, the language in the order must give clear instructions to OPM about how it is to divide the employee’s retirement benefit and how the former spouse’s share is to be determined.
The payment of a divorced spouse’s share in the employee’s benefit will commence when the employee retires or reaches retirement age as defined by FERS or CSRS. If the employee dies before then, no annuity payments will be made. Likewise, annuity payments will terminate when the retired federal employee dies.
Reduced payments will continue to the divorce spouse only if he or she also receives a former spouse survivor annuity per the court order. This annuity must be awarded at the time of the divorce and before the federal employee retires. Or, the employee can voluntarily elect to provide the survivor annuity for his or her divorced spouse. The divorced spouse is entitled to receive a former spouse survivor annuity only if he or she is also awarded a portion of the employee’s retirement annuity.
There are also specific requirements for the length of service that the employee must work to be eligible for an annuity. If the employee doesn’t meet the minimum requirement, there will not be any benefit paid to either spouse, except for a refund of the employee’s contributions. In fact, even if the employee is fully eligible to receive a monthly annuity, he or she can still elect to take a lump sum refund of contributions upon retirement instead of the monthly annuity payment. A court order acceptable for processing should address the division of a refund of contributions, just in case the employee chooses to take a refund instead of the annuity.
There is another type of federal employee retirement benefit called a thrift plan. The employee contributes a percentage of income to the plan. It’s similar to a 401(k) plan, but is operated by an agency of the federal government. It is administered by a different department than the FERS or CSRS, so the court order dividing the asset will have to comply with additional requirements to be acceptable.
For additional information about divorce and a federal employees benefits programs, federal employee pay rates, and more visit these web pages:
Federal Retirement Programs: Other Retirement Publications for booklets, especially the guidebook for family law attorneys. The booklets can be downloaded or printed from your printer.
Salaries and Wages for current pay information for federal employees.
http://www.opm.gov/ for more information from the Office of Personnel Management. Be sure to read the sections on health insurance and life insurance.
http://www.tsp.gov/ for information about the Thrift Savings Plan.
Here’s a short list of key things to remember about federal employee benefit plans and divorce.
- CSRS and FERS are different from private pension plans and cannot be divided by a Qualified Domestic Relations Order.
- You need specific, statutory language in a court order acceptable for processing by the Office of Personnel Management.
- The former spouse’s benefit terminates when the federal employee dies, unless the former spouse has an interest in a survivor annuity.
- The Thrift Savings Plan is a separate retirement plan, is administered by a different agency than the OPM and also requires specific language in a court order.
- There is a Federal Employee Group Life Insurance (FEGLI) program.
- There are federal health insurance benefits.
- Federal employees under Civil Service Retirement System do not contribute to social security, but can have a TSP account in which they contribute up to 7% of their basic pay. Federal employees under the Federal Employee Retirement Systems (FERS) contribute to social security. Their retirement
package is three-tiered: (1.) Annunity contributions to FERS, (2.) Social Security contributions, and (3.) Thrift Savings Plan up to 12 percent of their basic pay plus a 1% contribution and matching contributions (up to 5% on a percentage scale) from the employing agency.Disclaimer
The author and publisher of this article have done their best to give you useful and accurate information. This article does not replace the advice you should get from a lawyer, accountant or other professional if the content of the article involves an issue you are facing. Divorce laws vary from state-to-state and change from time-to-time. In addition, it is a very fact-specific area of the law, meaning that the particular facts of your marriage and divorce, as well as other external factors may determine how the law is applied in your situation. Always consult with a qualified professional before making any decisions about the issues described in this article. Thank you.
Divorce Schemes & Power Games
Divorce can be a dirty business when in the hands of lawyers who play power games to gain an unfair advantage over the other side. The same applies for angry, vindictive soon-to-be ex-spouses who have a “win at all costs” attitude. If this happens in your divorce, there are few things that you can do to control the other side, but there are several things you can do to prepare and manage the divorce.
The first thing to do is recognize a scheme and power play when you see it. The second thing is to not lose your cool and try to fight fire with fire. It will only cause things to escalate and your entire family will suffer. The final step is to think ahead and plan positive steps to counter your spouse’s power game. Get outside help if necessary.
The following list has descriptions and examples of some of those nasty tricks lawyers and their clients will sometimes pull. If your lawyer recommends that you do this, he or she is setting you up to take unfair advantage of your soon-to-be ex-spouse. If you do these things, don’t be surprised if your actions come back to haunt you after the divorce!
- Take the money out of jointly held bank accounts, put it all into an account in your name alone and don’t tell your spouse about it beforehand. Then let your spouse handle the problems associated with covering the bounced checks. This causes the most confusion and distress if your spouse usually writes the checks to pay the household bills.
- Use credit cards to purchase and stock up on personal items or make large purchases. Make sure to use the cards for which your spouse is the primary cardholder. This is especially effective at the beginning or near the end of a divorce. One lawyer actually told her client to go out the day before the settlement hearing and use her husband’s credit cards to purchase all the items she needed to set up her new household. Her husband would then be stuck with the bills because he had agreed to be responsible for the debt on his credit card as of the day of the divorce, which he didn’t know contained the charges made by his wife.
- If you have moved out of the family home and are the primary source of income for the family, refuse to pay any household bills or send any support until you are forced to do it by the court. This is one of the steps in a routine called “Starve Out The Other Spouse”. The goal is to get the other spouse in a financial position where he or she, out of desperation, will accept an unfair settlement.
- If your spouse doesn’t have an income withholding order, wait until the latest possible day to pay support money, even if you’ve got the money to send. In some states support doesn’t become delinquent until it’s 30 days past due and your spouse can’t do anything to you until the 31st day. Never mind that your spouse just might need the money to pay bills or buy things for the children.
- Petition the court for primary custody of your children when you will actually agree to a joint custody or visitation arrangement. The real purpose for the request is to strike fear into the heart of your spouse and use it as a club to get your spouse to give up on something else, usually a financial issue.
- Refuse to speak with your spouse about anything, including arrangements for him or her to have parenting time with your children. This falls into the category of a tactic used by some lawyers to create conflict, create issues that don’t need to exist, increase legal fees and wear the other side down. It can also cause a serious break in parent-child ties if the noncustodial parent doesn’t get to see the children because he or she can’t set up any parenting time.
- File a bogus petition to have your spouse excluded from the family home under your state’s protection from abuse laws.
These are just a few of the sneaky things that can and have happened in divorces. They are sometimes successful, but are very destructive to any meaningful and fair settlement discussions. In addition, the residual hard-feelings and bitterness they can leave after the divorce could hamper you and your ex-spouse’s ability to effectively co-parent your children. What’s more, they often lead to post-divorce legal proceedings costing additional and unnecessary legal fees which most recently divorced people can ill afford.
Getting a divorce is really just a risk/reward type of thing for some people. Is the risk and potential loss if you get caught by your dirty tricks worth any potential benefit, financial or otherwise, that you might get if you win the game? Think about it? Are you really the winner — or are the lawyers the real winners?
Disclaimer
The author and publisher of this article have done their best to give you useful and accurate information. This article does not replace the advice you should get from a lawyer, accountant or other professional if the content of the article involves an issue you are facing. Divorce laws vary from state-to-state and change from time-to-time. In addition, it is a very fact-specific area of the law, meaning that the particular facts of your marriage and divorce, as well as other external factors may determine how the law is applied in your situation. Always consult with a qualified professional before making any decisions about the issues described in this article. Thank you.
Divorce Lawyer Questionnaire
One of the most frequently asked questions about hiring a divorce lawyer is, “What questions do I ask?” To help you ask the right questions so you get the answers you need during an interview of a divorce lawyer, the Divorce Lawyer Questionnaire is copied from Divorce Strategy.
Attorney Questionnaire
Use the following list of questions to conduct an interview and learn information about a divorce lawyer before you hire that person to represent you.
- How long have you been practicing law?
- How much of your entire practice is specifically in family law?
- What is your hourly rate?
- Do you have other people who usually work on your cases with you? If so, what is their profession and experience? What do you charge for their time?
- What do you anticipate is the role that these people will have in my divorce?
- What is the retainer amount? Is any of it refunded if I should change my mind or we decide to not go through with the divorce?
- What other types of charges besides attorneys fees will there likely be? (long distance telephone, copies, facsimile charges, etc.)
- Describe a time line for how you believe my divorce will progress.
- Do you have a set procedure for handling a divorce case., If so, please describe how you would proceed with a typical divorce case.
- What do you expect from me as a client?
- What percentage of your divorce cases are resolved by a trial versus the percentage that are settled?
One question that isn’t on this list is: “Given the facts of my case as I have presented them to you, what do you believe is the best, reasonable outcome that I can expect to get from the divorce?” Unless you are paying for a consultation, most divorce lawyers will not answer that question in full until after you have hired him or her to represent you in your divorce. Even then, some divorce lawyers will “hem and haw” and tell you that there’s no way to know what the outcome be as it is all in the hands of the court. You shouldn’t accept that answer. The answers to these types of questions are very important to you as they will become the basis for your evaluation of any settlement proposal. Keep pushing for specific answers to specific questions.
Divorce Action Plan
The following information is excerpted from the Divorce Action Plan in the Appendix of Divorce Strategy. There are only 5 steps for each divorce phase shown here. The Divorce Action Plan in the book lists many more things to do and not to do.
Two of the most difficult things for you to do when you’re involved in a divorce is to concentrate on small details and to keep on track with your game plan. The Step-by-Step Divorce Action Plan is designed to keep you focused and organized. Refer to it during the different phases of your divorce. If possible, view your financial divorce as the separation of a business partnership.
Before Filing for Divorce
This is the time when you and your spouse are discussing the possibility of divorce. You may be in marriage counseling or individual therapy to save your marriage. It’s also the time to start your financial planning for a possible divorce.
- Gather historical financial documents such as tax returns, banking records, real estate purchase and sale documents and any other records pertaining to your assets. Use the information in Divorce Strategy to prepare your preliminary worksheets.
- Find a good divorce lawyer using the information in the Divorce Lawyer Questionnaire to help you in your search. Use your completed a Personal Information Planner to more efficiently utilize your time when you interview a prospective lawyer to learn about your potential risks and results if the divorce truly occurs. Start your divorce financial planning.
- Avoid stressful situations and conflict as much as you can. Plan any pre-divorce discussions with your spouse so that they occur in a neutral location. Avoid involving your children, friends and relatives in your divorce.
- If you and your spouse can have reasonable, somewhat amicable discussions about settlement, begin pre-settlement negotiations. Start with a full disclosure of the information about your income, assets, liabilities and expenses.
- If divorce is imminent and you and your spouse can’t communicate to work out your divorce settlement or if one of you is more in control and more powerful than the other, move on to the next step. Don’t waste time and energy on trying to work out an agreement until you are both on a level playing field.
Divorce Filed and Pending
Once you or your spouse have made the decision to go ahead, certain events occur whether you want them to or not. It is an extremely stressful phase. Do things in small chunks. Avoid trying to do everything at once. Manage your time so that you have a set relaxation period every day. Pay more attention to your needs and to those of your children.
- If your spouse hasn’t already done so, file for divorce. Your lawyer will file a petition, financial statements and other documents with the court. This begins the legal divorce process. Ask your lawyer to explain the progression of a divorce case through the court system where your case is filed.
- Take any mediated or negotiated settlement to your lawyer for review and comments. If you and your spouse do not have an agreement, work with your lawyer to come up with a proposal or encourage your spouse to submit a proposal to you and your lawyer. Don’t turn control of your divorce over to the lawyers.
- Work on your divorce financial plan using the worksheets and ideas in Divorce Strategy. Research other sources for additional information. Organize your paperwork. Keep it up to date.
- Make your own decisions. Be reasonable and receptive to new ideas and constructive suggestions. Accept responsibility for the outcome of your divorce. Work toward a settlement of your divorce. If settlement of all issues is impossible, agree with your spouse on as many issues as possible. Reserve any remaining disputes for a trial.
- Make plans and set goals for your finances after the divorce. Be realistic. Review and revise your goals on a regular basis as your circumstances become clearer.
After the Divorce
Your legal divorce is over. Now the wrap-up of your financial and emotional divorce begins. Keep meticulous records of your financial separation. Plan for your future. If you have residual feelings of anger or bitterness, get counseling to work through your feelings. If not, you will always be held back by your past. Strive to keep your emotional divorce separated from your financial divorce. Don’t confuse child custody and relationship issues with money issues. See the Divorce Recovery Journal for some great tips for help you through the healing process after divorce and to help you get on with life.
- Do what needs to be done to transfer ownership of assets. If you haven’t already done so, close all the credit cards, charge accounts or bank accounts in joint names so your ex-spouse’s name is removed from the accounts.
- Keep copies of any support checks you have paid or received. Keep an ongoing accounting and ledger of the payments. Make sure all the necessary documentation has been done if payments are going to be made by a wage assignment or through the courts. Keep the employer and/or the court clerks advised of any address change. Prepare and send bills to your ex-spouse if late payments or account balances are a problem.
- Prepare a financial plan for the next year. Set short, medium and long range goals. Make arrangements to pay any bills left over from the divorce or marriage. Start saving whatever you can, even if it’s only a few dollars each month. True Prosperity has some terrific ideas to help you with your financial planning.
- Prepare a post-divorce timetable for future events, such as an anticipated change in an amount of child support due to a child graduating from high school or a date when you are to pay your ex-spouse a certain amount of money.
- Live a happy, fruitful and prosperous life after your divorce. It’s the best revenge you can have against your ex-spouse.
© 1997 Broken Heart Publishing
Disclaimer
The author and publisher of this article have done their best to give you useful and accurate information. This article does not replace the advice you should get from a lawyer, accountant or other professional if the content of the article involves an issue you are facing. Divorce laws vary from state-to-state and change from time-to-time. In addition, it is a very fact-specific area of the law, meaning that the particular facts of your marriage and divorce, as well as other external factors may determine how the law is applied in your situation. Always consult with a qualified professional before making any decisions about the issues described in this article. Thank you.