Protecting Your Pension Plan Benefits In A Divorce
Pension plans play a major part in retirement. Therefore, it is essential that your interests and future are protected when it comes time to divide these benefits during the property division portion of your divorce.
Not all attorneys understand pension plan division. That is why it is critical that you speak with a lawyer who knows how these benefits are divided and consults with financial experts who can offer solid advice. At Brown Borkowski & Morrow in Farmington Hills, Michigan, we have extensive knowledge about pension plan benefits and how to divide them. We have helped countless clients reach reasonable resolutions regarding these benefits. Let us help you.
To arrange a consultation regarding pension plans and marital property division in Michigan, please call us at 888-757-1681 or complete our contact form.
Understanding Pension Plans
Many people think a pension plan and 401(k) retirement funds are the same. However, there are several differences between the two. Your 401(k) retirement funds have an account value as of a certain date; pensions do not. Pensions are future monthly benefits that guarantee a lifetime monthly benefit to the retiree and, in divorce situations, the former spouse. Generally, there is no cash balance and you cannot take loans against a pension as you can with a 401(k). Further, a pension is funded by the employer, not the employee.
Choosing A Payment Method
There are two ways a pension can be divided:
- Shared payment method
- Separate interest method
There are advantages and disadvantages to both options, depending on the specific pension plan in question. The biggest disadvantage of the shared method is that the alternate payee, usually the wife, has to wait until the husband retires to get her benefits. The amount may be larger, however, than with the separate interest option.
Also, it is important to identify temporary benefits that “fall off” after a certain age. Some people are shocked to learn that a portion of their monthly payment may be a temporary benefit that ends when they reach a certain age, drastically decreasing their payments. There are also issues surrounding when and how benefits end for each payment option if the retiree dies pre- or post-retirement.
Experienced in these complex issues, we will request the necessary documents from the plan administrator during the discovery process so that we can identify potential problems and explain them to you.
Serving Clients In Detroit And Beyond
Pensions are significant benefits to be negotiated in a divorce. For experienced assistance, call us at 888-757-1681 or contact us online to schedule a free consultation.