(continued from previous column...)
calstrs is governed by the california education code and is not a qualified plan
The Teachers’ Retirement Law provides that those members who have retired or are receiving any other CalSTRS benefit, the time rule formula is available while for those members who have not retired and are not receiving any other CalSTRS benefit, the segregation method is available as well as the time rule method.
calpers is governed by the california goverment code and is not a qualified plan
According to the plan brochure "the plan administered by CalPERS is a "governmental plan" as defined in section 414(d) of the Internal Revenue Code of 1986, and is not subject to the provisions of section 414(p) of the Internal Revenue Code and section 206(d) of ERISA which govern "qualified domestic relations orders." The terms of the plan are set forth in the California Public Employees' Retirement Law ("PERL"), which can be found at section 20000, et seq., of the California Government Code.
The administrator of the plan is the CalPERS' Board of Administration. Neverthess CALPERS have their own requirements for division of the interests and the process is similar to division of other retirement plans. CALPERS is well organized, cooperative in accepting joinders to a case, and quickly responds to draft PERLs with either an approval or denial as to the acceptance of language in model orders.
enforcing support with a qdro.
QDROs are used in divorce, separation and certain nullity cases to divide interest in retirement plans but may also be used to enforce support orders. The models used by most administrators were developed for property division and do not easily translate to orders for enforcing child support but the law appears to state that QDROs were developed not ony for division of the asset. Pursuant to 29 U.S.C. § 1056, a retirement plan can be used to provide child support and alimony payments.
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Half of the population of the United States owns stocks although many holdings are in the form of retirement participation. When the market ails, so does America. |
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In 1980, 60 percent of workers were covered by defined-benefit pension plans and just 17 percent relied on defined-contribution plans, such as a 401(k), according to the Center for Retirement Research at Boston College. By 2004, the numbers had changed dramatically: 11 percent of workers were covered by defined-benefit plans and 61 percent were covered by defined-contribution plans. |
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CalPERS, the largest public pension fund in the nation, has an investment portfolio of $169 billion.
The nation's second biggest retirement fund, CalSTRS, the system for the 833,000 teachers in California's public schools, has a portfolio valued at $114 billion. |
erisa and the anti-alientation clause
Congress supports the idea that participants of sponsored retirement plans should not be able to gamble, owe or dissipate retirement funds. This value has a strong social purpose. Congress also protects participants' funds from creditors. Dissipated retirement funds pose a liability to the government.
ERISA qualified plans are governed by a spendthrift or anti-alienation provisions. The 'spendthrift clause' prevents transfer and serves the same purpose as equivalent provisions written into trusts to prevent a prodigal beneficiary from wasting an inheritance. The law restricts participants from being wasteful with their retirement money while at the same time prevents creditors from invasion.
1984 amendments to ERISA, the retirement equity act
An exception to the anti-alienation clause was created in 29 USC 1056(d)(3)(A), the Retirement Equity Act. This provision births QDROs and distinguishes between non-qualified domestic relations orders and qualified domestic relations orders.
and where qdros fit in...
Divorce attorneys must use QDROs to allocate interests in qualified retirement plans under a divorce decree. Most divorce decrees say little or nothing about the division of the asset except that the interest should be allocated to one or the other or divided. Most decrees are silent on survivorship provisions and other key issues, leaving the negotiation of the terms of the QDRO open to more litigation and uncertainty, exacerbated by ignorance and procrastination. This may have extremely negative results when a participant retires, remarries or dies.
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