If the community interests in a defined benefit plan or a CalSTRS defined benefit supplement plan are divided equally during a divorce, no assessment is usually required. To officially retire and receive benefits, all members must have a balance of at least 5 years of service. CalSTRS 2% with 60 members can receive retirement benefits at age 55 or age 50 if they have 30 years of service credit. Your ex-spouse or his or her lawyer can make a community property claim against your CalPERS pension at any time. Funding for this plan is shared by employers and members, with members` share deducted from each paycheque. While the benefit formula may vary depending on additional years of service, incentives and bonuses, the two benefit structures are “CalSTRS 2% at age 60” and “CalSTRS 2% at age 62”, with the normal retirement age depending on the program to which the member belongs. California has rules that allow an ex-spouse to “force” a member spouse to pay a monthly amount to an ex-spouse as if they had retired if the ex-spouse gets impatient and waits for the member spouse to retire. This action is commonly referred to as the “Gillorian election”. For full-time public school teachers (pre-K-12 and Community College) and public school administrators, CalSTRS membership is mandatory. In general, part-time employees, including substitute teachers, may choose to participate in the Defined Benefit Program or the Cash Balance Benefit Program.
In California, all types of pension benefits are considered community property, allowing CalPERS benefits to be divided upon dissolution of marriage or registered domestic partnership or legal separation. Instead, the estimated benefit should be calculated using the appropriate plan formula to determine the actuarial present value of the prospective beneficiary. Several assumptions go into these calculations and it is worth consulting a financial professional to make sure this is done correctly. Coverage A participants must be under the age of 60 to apply for the disability benefit, which automatically ends at age 60 and is converted into an old-age pension. For members aged 45 to 60 and with less than 10 years of service, the benefit is calculated according to an alternative (reduced) formula. This is an important difference because it affects the formula used to determine the monthly retirement benefit. However, the non-participating spouse has full control over their separate account and can decide, provided the eligibility criteria are met, when to apply for benefits instead of waiting for the participating spouse to retire. A spouse who is not a member may also designate a death benefit recipient and may also be entitled to a proportionate share of the pension improvements to which he or she was entitled at the time of termination. We will not pay retirement benefits to you or your former spouse until your entitlement to community property has been settled. In the time rule formula, the number of service credits earned during marriage is divided by the total number of service credits, which are then generally divided into two halves to determine the amount of the monthly benefit paid to the spouse who is not eligible for membership.
There are two basic methods of splitting that are used to allocate a member`s participation in a CalSTRS plan to the non-member spouse: 1) the time rule formula or 2) the segregation method. Here are the steps to follow to settle your application for community ownership: For cash balance plans, members who divorce before receiving their retirement or disability benefits must use the separation of division method. Those who divorce while already receiving a pension or disability benefit must divide it by allocating a share of the community`s property in the form of a certain percentage or amount in dollars. Once CalPERS has approved the QDRO, file the order with the court. Any party can do this – you, your ex-spouse or a lawyer. For more information on community ownership, see A Guide to CalPERS Community Property (PUB 38A) (PDF), CalPERS Model Domestic Relations Orders (PUB 38B) (PDF), and Facts About Community Property (PDF). If the time rule formula is used, the court order must address specific issues, including what happens if the member dies before the non-member spouse, options choices, what happens if the non-member spouse dies before the member spouse, and lump-sum death benefits. The decision to use the time control formula or the separation method depends on the personal circumstances of the parties. The age of the parties, possible salary increases and other factors must be carefully considered. Seeking help from a certified divorce finance analyst can be very helpful here. For members only, calculated using the basic benefit formula, the benefit is paid to the member during his or her lifetime and does not provide a monthly benefit to beneficiaries. As part of the membership list, dues earned on the account and interest that have not yet been paid may be refunded.
In order to join CalSTRS as a party to the divorce action and enforce a court order on the distribution of membership benefits, CalSTRS must receive a membership form. One of the methods used to calculate your ex-spouse`s community property interest is the “time rule formula.” The WEP formula reduces social security benefits based on the number of years a person has contributed to the program. .