Joinder of Retirement Plan in Divorce

Most retirement plans or pensions can be divided in a California divorce. In particular, California courts split retirement plans and pensions between divorcing spouses similar to how other property is divided (50/50). In this case, retirement plans require an additional process, commonly referred to as the joinder of retirement plan, in order for a retirement to be legally divided. Read on to learn more about the joinder of retirement plan in a divorce.

Difference Between Pension and Retirement Plan

What is the difference between a pension and a retirement plan? The main difference between these plans is who contributes to the fund. Employers fund pensions. On the other hand, employees put their own money into retirement plans, like a 401K, although often the employer may match or add contributions as well. Funds accumulated through either type of plan during the marriage are considered community property.

For further clarification, a pension is a “defined benefit” program. An employer puts money into some investment pool that is used to pay pension benefits to retired employees. These benefits are usually based on a formula based on the number of years the employee has worked for the company, their earnings and their age. On the other hand, a retirement plan is a “defined contribution” program. With a defined contribution program, employees contribute part of their earnings to some investment to be withdrawn at retirement. These plans typically have no “guaranteed benefit” and their value could go up or down based on the current stock market.

Joinder of Retirement Plan Overview

In California, the property each spouse owns before marriage is his/her separate property. In this case, separate property is not divided in a divorce. On the other hand, retirement or pension contributions made during marriage are considered community property. For the most part, retirement accounts and pension benefits are split 50/50 in a divorce unless the parties agree to a different division. By the same token, the spouse may agree to accept another asset in lieu of obtaining retirement or pension benefits.

A pension/retirement may have both separate and community property contributions because a spouse may have paid into the plan before the date of marriage, during the marriage, and after the date of separation

To begin with, the Joinder of retirement plan or pension takes place when a retirement plan administrator is formally added to a divorce case.  The third-party is the pension retirement provider. First, the retirement plan administrator must be notified of the underlying divorce. Specifically, the retirement plan is added to the divorce upon the filing of various forms with the court. Afterwards, the Joinder of the retirement account is served on the plan administrator.

Some Retirement Plans Require Joinder

There are some retirement plans that, by their nature, require a formal Joinder of the plan. This information sheet identifies plans that require formal Joinder. For example, the California State Teachers Retirement System (CALSTRS), the University of Retirement System, and various county and city government agencies require a claimant to join the retirement plan to the divorce. 

Before you can get an QDRO to divide the retirement/pension plan, you must check to see if the plan needs to be “joined” to the family law case with a Joinder.

File your Joinder application with the court as soon as possible. Next, serve the Joinder on the Plan administrator. As a rule, once the Joinder is served, the retirement plan will be placed on hold until the plan administrator receives a Qualified Domestic Relations Order (QDRO). Furthermore, aside from the retirement account being placed on hold, the employee will not be able to conduct any account transaction withdrawals.

How to Join a Retirement Plan or Pension in Divorce

In order to complete a Joinder of retirement plan in divorce, the following documents are required to join the plan and complete the QDRO process:

1. Request for Joinder of Employee Benefit Plan and Order (Judicial Council Form FL-372)
2. Pleading on Joinder—Employee Benefit Plan (Judicial Council Form FL-370)
3. Summons (Joinder) (Judicial Council Form FL-375)
4. Notice of Appearance and Response of Employee Benefit Plan (Judicial Council Form FL-374)
5. Retirement Plan Joinder—Information Sheet (Judicial Council Form FL-318-INFO)
6. Info for Service of Process of Plan
7. Notice and Acknowledgment of Receipt (Judicial Council form POS 015)
8. Qualified Domestic Relations Order. There is not a “one-form-fits-all” for the actual QDRO. Each retirement Plan has their own requirements regarding how they want the QDRO drafted. Each Qualified Domestic Relations Order must be custom prepared based on each Plan’s QDRO

The forms include detailed information regarding the employer and retirement plan. Once the forms are filed with the court, the clerk will issue an Order of Joinder. This order and the required response and notice documents must be served on the retirement plan administrator. Afterwards, the retirement plan administrator will have 30 days to respond to the order. For the most part, a pension should joined as a party to the divorce as a protective measure.

Low-Cost Professional Help for Joinder and QDRO Preparation

In conclusion, it is important to get professional help when preparing Joinder and QDRO documentation. In short, if the documentation is not properly prepared, it could have a negative affect on the rights of the spouse who was awarded part of participant’s benefits. Furthermore here are risks if  you don’t get a QDRO signed and filed before your divorce is granted.  For instance until a Joinder of retirement plan in divorce is served or a Qualified Domestic Relations Order filed, the participant spouse may be able to cash out the pension without notice to the other spouse.  Alternatively, they may also be able to take a loan against the plan. Secondly, if your ex-spouse passes away after your divorce, the pension/retirement plan might be inherited by someone else because you are no longer the spouse.  proceeding prior to the entry of judgment granting the dissolution of marriage.

Contact A People’s Choice for more information about how to process a formal Joinder of retirement plan in divorce. We can help you prepare and file all the documents you need to join the pension to the divorce as well as prepare the necessary QDRO.