Pension and retirement benefits are generally considered property subject to distribution by the Court in a dissolution action, whether or not the benefits are vested. The law considers these benefits to represent deferred compensation. This means they were accrued during the marriage and belong to the marital community, rather than to the spouse whose employment generated them.
There are many retirement benefits to consider in a property division, including IRA’s, pension plans, 401K’s, stock options, sick leave and deferred compensations.
A pension plan can be divided in two primary methods. First is to find the present value of the future stream of benefits, by sending the information to an actuary, who uses life expectancy tables and projected interest rates to determine its value in today’s dollars. This benefit can then be awarded to one spouse and offset with other assets to the other spouse. The other method is to use a Qualified Domestic Relations Order (QDRO) to divide the benefit now, so that both spouses will share the benefit at retirement age. The same can be done with a 401(k) plan, where the QDRO can award a spouse an interest in the retirement benefit in a divorce without incurring any penalty and without any tax as long as it is rolled over into another tax deferred vehicle (IRA). The QDRO can award either a dollar amount, or a percentage. This can be done with a Boeing Pension or Boeing 401(k) (VIP), or retirement accounts of other businesses.
Washington State pensions, including Public Employees’ Retirement System (PERS), Teachers’ Retirement System (TRS), School Employees’ Retirement System (SERS), Law Enforcement Officers’ and Fire Fighters’ Retirement System (LEOFF), Washington State Patrol Retirement System (WSPRS), Judicial Retirement System (JRS), and Judges’ Retirement Fund (JRF), all require special statutory treatment for division, rather than a QDRO. Specific information on these pensions can be found at the following web page http://drs.wa.gov/member/.
A family law attorney can advise you on how retirement benefits can fit into a fair division of assets, and help in getting them valued. QDRO’s need to be approved by both the court and the pension administrator. Be sure to have your QDRO reviewed by an attorney.