Is it true the federal government does not accept QDROs?
In part it is true that the federal government does not accept QDROs, in the sense that the term QDRO, or Qualified Domestic Relations Order, applies to the private sector. Federal pensions are exempt from QDROs because they are exempt from ERISA, the Employee Retirement Income Security Act of 1974. This is not to say that if the Office of Personnel Management (OPM) receives a court order with the term QDRO in it that it will be rejected only that it must also make reference to Part 838 of Title 5 of the Code of Federal Regulations (C.F.R.). The federal government’s functional equivalent is the Court Order Acceptable for Processing or COAP, and for the Federal Thrift Savings Plan it is referred to as a Retirement Benefits Court Order. What makes COAPs different from QDROs is that a QDRO served on a pension plan in the private sector can provide for a separate interest for the alternate payee, if served on the plan before retirement, allowing for the monthly pension benefit payable over the lifetime of the alternate payee. This is not true of most government plans, nor will the military provide for a separate interest for a former spouse.
Separate interest QDROs only pertain to private sector pensions and prior to retirement. Government, military, and pensions in-pay status (private sector and government pensions) can only allow a non-participant spouse to “share” in the pension payments, hence the term Shared Interest QDROs, where payments end upon the death of either party; A good reason to consider survivor annuity language for the former spouse. There are also two (2) different federal pensions, namely Civil Service Employees Retirement System (CSRS), for those federal employees who began employment prior to December 31, 1983, and Federal Employees Retirement System for those that commenced employment on or after January 1, 1984. This is aside from the federal Thrift Savings Plan, a voluntary plan. Not only are the terms and conditions of the federal pensions different from the private sector, in what can be provided to a former spouse, but there are also differences between FERS and CSRS. Understanding the differences will help avoid the client from having different expectations as to their awarded share and keep them from coming back into your office in the future asking “what happened to their share of the pension?”
Tim Voit is the author of Federal Retirement Plans in Divorce – Strategies and Issues, available through www.vecon.com, and Retirement Benefits & QDROs in Divorce, a CCH publication. Mr. Voit is also the author of several articles on pensions in divorce. For the rest of the article on Federal Pensions visit http://www.vecon.com/articles/csrsfinal.htm