Recently TIAA changed their divorce procedures and will NO LONGER allow for a historical division date. (such as the date of separation). They are only allowing for a percentage or specific dollar amount awarded on a Deferred Annuity (one that is not in pay status) to the Alternate Payee as of the Date of Transfer (this is the date that the AP's account would be funded once TIAA qualifies the final Order).
This change poses a problem for attorney and their clients, as in most divorce cases using the date of separation is the common method when dividing retirement plan accounts, to avoid including post-marital contributions. Now someone (and the Plan will not do this) is going to have to calculate the value as of the date of separation and bring that amount up to the anticipated transfer date (or as close as possible).
Going forward, you may need to account for the possibility of defined contribution plans not allowing a date of separation or other agreed upon date in the past. If that is the case, you may need to include language in your settlement agreement to account for this.
If a Plan will not use the date of separation (or other agreed date), a calculation will need to occur to compute the former spouse’s share as of the closest date of distribution or segregation of the account to determine the former spouse’s share as of that anticipated date. The spouse with the employer Plan will provide all the necessary statements to a QDRO specialist or other qualified professional up to the most current date so the marital amount can be calculated.
It would also be strongly suggested that this be determined while the parties are in the negotiation stages. All employer plans to be divided should be vetted to find out their plan divorce procedures in advance of signing a property settlement agreement. If you require marital/non-marital calculations on a retirement plan these should occur during the negotiation stages so that everyone will know what a current amount subject to division would be. If prior account statements are unable to be obtained this may require some creative options in your negotiations. The time to find this out is before everything is finalized NOT afterwards!
If you need an expert with investment knowledge to know exactly how to allocate gains/losses, to understand the performance of the various funds, loans, pre-tax and after-tax amounts, and understanding pre-marital and post separation contributions may be needed, The QDRO Company can assist with all these financial complexities.
By: Sharee Burkel, CFP®, CDFA®, CQS™
Sharee is the President and Owner of The QDRO Company, LLC, and a Certified QDRO Specialist.
Nothing herein is to be construed as providing legal, financial or tax advice.