Dividing Benefits for Civil Government Employees
While civil government benefits are somewhat similar to military benefits in some ways, they are also unique and equally specialized. There are typically two types of civil government employee plans that may need to be divided through domestic/family court orders subsequent to legal separation or divorce: the Federal Employee Retirement System (FERS) and the Civil Service Retirement System (CSRS). Division of these retirement benefits must be processed and accepted through the federal agency that administers these benefits, which is called the United States Office of Personnel Management (OPM).
The order that needs to be entered is a COAP (Court Order Acceptable for Processing). If any family law or domestic attorney discusses the need to negotiate or enter a “QDRO” (Qualified Domestic Relations Order) in reference to dividing a federal employee pension, you should be concerned that he or she is not familiar with the correct terminology- let alone the actual needed order- that is required to be prepared.
What needs to be included in these division orders?
You need an attorney with drafting experience and precision who can address the nuanced complexities of these government orders. The order needs to be accepted and approved by the appropriate retirement plan administrators. Some of the things that impact the value of the ultimate retirement share received include (but are not limited to) the length of the marriage, the calculation of the service period (and how the calculation is performed), the rank/position that the government employee is in, their classification and finally, whether survivor benefits protection is granted.
Federal Employee’s Retirement System (FERS)
On June 6, 1986, the FERS (Federal Employee Retirement System) was created by Congress as a successor plan to the previous Civil Service Retirement System (CSRS). FERS became effective January 1, 1987. All civilian federal employees are covered under FERS. FERS is a three-tiered retirement plan that provides social security benefits, the Defined Benefit Plan and the Thrift Savings Plan (TSP). Federal employees covered under FERS are also subject to full social security taxes. One of the requirements of FERS is that federal employees pay and be responsible for their social security taxes every pay period.
In addition to the social security benefit and the FERS benefit, the Thrift Savings Plan is available to federal workers. Employees can make contributions up to the maximum amount established by the IRS each year. Contributions to the TSP can be tax-deferred or ROTH in nature (i.e. the employee pays the taxes but then can withdraw the funds tax-free). The employee’s respective agency will contribute one percent of basic pay earned for the specific pay period and the will also match a portion of what the employee contributed, up to the government maximum of 5%.
What is the FERS defined benefit?
It allows federal workers to be paid a monthly benefit based upon the number of years they worked under FERS, their income and the age they retired. It is a monthly annuity plan. The majority of Federal workers contribute 0.8 percent of their basic pay each pay period toward their FERS retirement. Federal workers can receive their FERS benefits through immediate retirement and early retirement options.
Whether you are dividing private-sector employer retirement plans, military pensions, civil service pensions, 401k’s, IRA’s, city or state employee pensions, railroad retirement pension, profit sharing plans, getting a specialist in place who can help you understand the options available to you (whether as an employee trying to protect your retirement asset) or as a spouse (trying to ensure that your interests in the plan are protected), Pingel Family Law can help and assist you in making sure the necessary orders dividing these interests are fairly and accurately prepared. For many government employees, their retirement plans are their most valuable asset and therefore, ensuring accurate and adequate protection through the careful and skilled drafting of the division orders is a necessary component of wrapping up your divorce or other family law process.
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