What You Need to Know About Keeping Your Pension in a California Divorce
In California, pension benefits earned by a spouse during the marriage are community property. All community property is subject to equal division upon divorce. However, this varies by circumstance. Here’s what you need to know about keeping your pension in a California divorce.
The court has the discretion to divide community property pension benefits in any equitable manner. If both spouses have a pension during their marriage, then either spouse may be able to keep their own pension after the divorce.
What is Community Property?
Under California law, marriage joins two people together as one legal community. Thus, the property that the couple acquired during marriage is considered community property. In California, each spouse/partner owns one-half of the community property. Therefore, any money paid into the pension plan during the marriage is community property. Unless the couple agrees otherwise, the community property part of the pension is divided equally.
Related: Community Property Laws in California
Division of Pension Benefits After Divorce
The division of pension benefits varies by circumstance. Generally, the court may award the entire community property interest in the pension to the employed spouse and award the other spouse other assets of equal value. The court may also divide benefits in kind, or reserve jurisdiction to supervise future payments to each spouse.
- Full pension rights to the employed spouse are often referred to as division by cash-out, in which one spouse is awarded the entire pension and cashes out the benefit of the other spouse. The non-employee spouse’s benefits are equivalent to the value of the pension benefits.
- Division in kind simply means the pension benefits are divided equitably among the former spouses.
- Reservation of jurisdiction by the courts typically occurs as pension plans and their benefits may change over time. In this case, it is appropriate for the court to settle the order and intent of the divorcing parties with later changes in the employee spouse’s pension plan or plan benefits.
As a general rule, the courts use their own discretion in distributing pension benefits following a divorce. It should be noted that whichever method the court decides upon, it is one that is reasonable and fairly representative of the total value of the community property.
In order to receive pension benefits that have been awarded in a divorce, it is important to obtain a court order. The court order states how to divide and pay benefits to the divorced couple. The court order must be submitted to the pension provider – ensuring that the correct benefits are paid to a former spouse.
A special order must be prepared to divide the plan, either through a Qualified Domestic Relations Order (QDRO) or Domestic Relations Order (DRO). QDROs are used for private pension plans and DROs are used for state and federal public pension plans. Both orders decide how much of the money from the pension plan goes to each spouse.
How to Get a QDRO/DRO for a Pension Plan
1. List the pension plan as either community or separate property (or both) on the Petition or Response.
- Use form (FL-460) for a QDRO pension plan
- This form tells the litigant that the judge orders spousal/partner support to be taken out of the pension plan once a month
2. Join/add the organization that manages the pension plan (if it is required by the spouse’s type of plan – See FL-318 “Retirement Plan Joinder—Information Sheet”).
How to Join a Pension Plan
Necessary Information:
1. The full and accurate name of the pension plan.
2. The spouse’s date of birth, Social Security. Number, and their current address.
Forms to be completed:
- Request for Joinder of Employee Benefit Plan and Order (FL-372)
- Pleading on Joinder—Employee Benefit Plan (FL-370)
- Summons (Joinder) (FL-375)
Joinder
Sometimes the organization that manages a pension plan must be added as a party in a California divorce. This is often done prior to preparing the QDRO or the DRO.
“Joinder” simply means adding another party (besides the petitioner and respondent) to the case.
To determine if a Joinder is required in a divorce case, see the Retirement Plan Joinder—Information Sheet (FL-318-INFO).
Please see the local court’s process for filing the Joinder forms.
What To Do Next
The organization that manages the pension plan must be served with a copy of all the documents you filed. The following documents must also be served to the organization:
1) Notice and Acknowledgement of Receipt (FL-117) – Complete only the caption and the top signature line.
2) Notice of Appearance and Response of Employee Benefit Plan (FL-374) – Leave this form entirely blank.
3) Complete a Proof of Service by Mail (FL-335) showing that the pension plan has been served.
Contact Us
If you or a loved one have any more questions on how to keep your pension in a Califonia divorce, contact us. Get your free consultation with one of our California Property Division Attorneys today!