The California State Teachers Retirement System (also known as CalSTRS) provides retirement, disability, and survivor benefits to teachers and their families. More specifically, eligible beneficiaries include vested teachers who have served in California school districts, community colleges, and administration offices. If initiated while married, a spouse’s CalSTRS pension benefits are classified as community property. Therefore, an individual with a CalSTRS pension must divide it with their spouse upon divorce, unless the parties agree otherwise.
Overview of CalSTRS Pension Plans
CalSTRS provides three different types of retirement plans:
1) Defined Benefit Program participants receive a lifetime benefit based on their years of service credit, final compensation, and age.
2) Defined Benefit Supplement provides additional funds to members upon retirement.
3) Cash Balance Plan for part-time teachers allows retired members to choose to receive a lump-sum payment of their account balance if it exceeds $3500. Alternatively, they may roll it over into another retirement account.
How to Divide CalSTRS Retirement Benefits
Upon divorce, both parties must follow a specific process to join the CalSTRS pension to the divorce. After joining the pension, the couple can finalize a CalSTRS pension retirement division. Next, upon filing a divorce petition, the parties must also serve CalSTRS with legal documents indicating a party is claiming a community property interest in a CalSTRS pension. This process is known as a joinder.
The Joinder Process
The joinder formally brings CalSTRS into the divorce proceedings as an interested party. Now, CalSTRS has 30 days to file a response to the joinder. Furthermore, the joinder puts a legal hold on the retirement account. Therefore, the CalSTRS member will not be able to make any account changes. For example, they may not designate beneficiaries or take other action during this time.
Dividing CalSTRS Benefits With The Segregation Method
There are two formulas for dividing a CalSTRS benefit account. The first formula, also referred to as the “Segregation Method” is used by members that divorce prior to receiving a retirement or disability benefit. With this formula, the non-member spouse receives 50% of the member’s service credit, contributions, and interest accrued from the date of marriage to the date of separation. Additionally, they may access this lifetime monthly benefit when they reach 55.
Dividing CalSTRS Benefits With The Time Order Rule
The second option, referred to as the “Time Order Rule,” is used by members who divorce before or while receiving a retirement or disability benefit. With this rule, the non-member spouse receives a percentage of the member’s monthly benefit. Specifically, CalSTRS calculates this percentage based upon the service credit earned while married. Under this formula, the non-member spouse will receive their benefit after the member spouse retires.
Social Security Benefits
CalSTRS member spouses will not receive Social Security upon reaching the age of eligibility because they did not pay into Social Security while working as a teacher. However, if the spouse vested into Social Security prior to or after serving as a teacher, their Social Security benefit will be offset by their CalSTRS benefit. On the other hand, the non-teacher spouse can receive their Social Security benefit.
Contact A People’s Choice for more information about CalSTRS pension retirement division. We can help you prepare the required joinder and qualified domestic relations order.