What is CalPERS? CalPERS is the abbreviation for California Public Employees Retirement System. This is the California agency that manages and tracks the general trust fund for pension and health benefits for California public employees, retirees and their families (and former spouses of former employees). Members include workers in law enforcement, schools and some county and city jobs. As of 2013, within the State of California, there were over 1 million members of which over half of them were receiving monthly benefits.
What is a CalPERS Pension/Retirement Division?
During the completion of a divorce property rights are often determined. Pension/Retirement accounts are sometimes one of the largest assets that need to be divided. Once the divorce judgment awarding the former spouse a portion of the CalPERS member’s benefits is filed, the next step to divide the funds can begin. A common misconception is that the divorce judgment alone is enough to gain access to the account. A document known as a “Qualified Domestic Relations Order” or QDRO (Quad’-row) must also be filed at the court. This court order incorporates the terms of the divorce judgment regarding the CalPERS benefits and gives specific and binding instructions to CalPERS to complete the pension/retirement division. Once CalPERS receives the filed QDRO they will process the division of benefits.
What is involved in a CalPERS Pension/Retirement Division?
With many pension/retirement divisions in California there is a specific process to effectively divide a benefits account. A CalPERS pension/retirement division is no different. The court requires CalPERS to be joined into the court case. Similar to the initiation of the divorce case when a summons and petition was filed and served on the other party, CalPERS must also be served with documents indicating a party is attempting to complete a CalPERS pension/retirement division. Similar to the divorce again, they have 30 days to respond after service before a QDRO can be filed. Once signed by the Judge, the QDRO can then go to CalPERS as an order directing them to divide accounts. It’s important to note, that now most Judges in California are requiring an approval letter from CalPERS indicating the QDRO has already been reviewed and approved by their legal team. We will talk more about this below.
The Different Models for the CalPERS Pension/Retirement Division.
Within the CalPERS pension/retirement division guidelines there are currently 3 options for division of the account. CalPERS refers to them as models, specifically model A,B &C. Each model is laid out for specific employees, current or former, and each divide the accounts differently.
Model A is laid out for spouses who want a separation of account when the member is still an active employee (not retired). The model takes the date of marriage and date of separation and splits the balance within that timeframe. They then allow the former spouse to receive a check or roll over funds to their own designated account.
Model B is also a division of benefits for active members. This model uses a formula to divide benefits rather than a specific dollar amount. CalPERS takes the member’s service credit from date of marriage until date of separation divided by total service credits and divides it in half
Model C is a division of benefits for retired members only. It is similar to the division in model B, but also factors into the formula the monthly benefit payment currently being paid to the member.
For further information about the use of the different models, or any implications of accessing the retirement benefits, contact a family law attorney as well as a tax professional.
What is the Time Frame for a CalPERS Pension/Retirement Division?
Time frame for the CalPERS pension/retirement division can vary on several different factors but below we have outlined some general timelines. In California, before a QDRO or CalPERS pension/retirement division can be processed the court initially requires a “joinder” to be filed at the court and served on the plan administrator. This can be done within a few days, but does require a 30 day wait period after the serve before filing the QDRO. Many of the California courts are taking about 3-5 weeks for the Judge to sign the QDRO. These two major steps in a best case scenario can be completed within about 60 days but as stated above, more Judges require an approval letter from CalPERS to sign the QDRO. Like most every situation, the more parties that are involved, the more time it takes to get things done. In this situation, there are two government entities involved, so time is not on your side.
Further, the timeline varies depending on which model is used to process the CalPERS pension/retirement division. The quickest processing time occurs with CalPERS Model “A” which is presently taking their department about 6-10 weeks for review and approval. The slowest processing time occurs with CALPERS Model “B” and “C” which is presently taking their department 16-24 months!!! So considering these legal timeframes, court processing times and the CalPERS review times you could be waiting between 4 months to around 2.5 years.
How Our Team Handles CalPERS Pension/Retirement Divisions.
Understanding the complexity of the task is necessary to effectively divide a CalPERS pension/retirement division. If we have all the information, our team can have your joinder documents ready to sign the same day of your appointment and filed at the court shortly after. We then immediately facilitate the serve on CalPERS while concurrently working on the QDRO draft for CalPERS review. As soon as an approval is obtained we obtain signatures and dispatch the approved CalPERS pension/retirement division to the Judge for final execution. Once processed by the court and sent back to each party, the division of benefits can begin. Understanding that time is money especially when it comes to CalPERS accounts our team will not waste your time.
More information for CalPERS members and former spouses of members can be found at the CalPERS website here. http://www.CalPERS.ca.gov/ .
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