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Since 1992, Maurice Johnson has been a Colorado tax attorney with an advanced Master of Law Degree in Taxation (1992). He has been doing Colorado QDROs for the past 23 years. The purpose of these videos and PDF files is to provide general QDRO information. The law is complicated and every case is different. As one of the biggest financial and emotional events in a person’s lifetime, divorce is not a “check the box” or “use a template” exercise. For more see the video about Maurice Johnson.
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6. Tax Penalties: A 10% early withdrawal penalty applies to cash withdrawals from a tax-deferred account, including an IRA, if younger than age 59.5. Except not for withdrawals from a QDRO account. To avoid the penalty, avoid rollovers from a qualified retirement account to an IRA.
7. Marital Property vs. Separate Property: Under Colorado law, the trial court Judge must divide martial property, but does not have any power or jurisdiction to divide separate property. You must claim separate property in order to protect it.
8. QDRO Account Valuation Date; Earnings and Losses: In accordance with CRS 14-10-113(5), assets and liabilities in a Colorado divorce are divided as of the 14-10-113(5) date. Except that the Parties can agree to a different date in their separation agreement or Memorandum of Understanding.
9. 401(k), 403(a), 403(b), 457 and Other Defined Contribution Plans: Defined contribution retirement plans are divided (assigned) using either a percentage or a fixed dollar amount as of the CRS14-10-113(5) date. Make sure you designate the valuation date and how any loan will be handled.
10. Pension Separate Interest vs. Shared Interest QDRO A separate interest pension QDRO save the Parties the cost of a survivor interest. That savings is about 7% to 10% if each monthly payment for life. Some government plans such as the Colorado PERA do not allow for a survivor benefit.
11. Pension Plan Valuation. Beginning about 10 years ago, lump sum valuations of monthly pension retirement payments have been filed with the court in order to liquidate the martial interest and/or offset other marital assets for the benefit of the Alternate Payee. Essentially all of these valuations are totally incorrect. They are a scam. This video will analyze the methodology and apply it to the PERA retirement benefit.
12. Hunt Time Rule Formula for Dividing a Pension Plan. The Colorado Supreme Court case “Hunt” held that a Military Retirement Plan should be divided using a Time Rule Formula which is a coverture fraction intended to divide the future retired military pay at the time of retirement. In other words, the CRS 14-10-113(5) date should not be used. In 2017, DFAS overruled the Hunt case and now the 14-10-113(5) date must be used.
13. Colorado PERA Retirement Benefit The Colorado PERA retirement benefit is a hybrid plan which is more like a 401(k) plan than a defined benefit pension plan.
14 Federal FERS Pension Plan COAP Unlike the Colorado PERA retirement benefit, the Federal FERS Plan is a real defined benefit pension plan It has a monthly retirement benefit for life which is based on years of service and most recent annual compensation.
15 Federal Thrift Savings Plan (TSP) RBCO. The Federal Thrift Savings Plan is similar a private business 401(k) plan. the TSP is available to both Military and Civilian employees.
16 Military Retirement Benefit Division. The Federal Military Retirement Benefit is a monthly retirement benefit which is paid monthly over the remaining life of the Service member. Beginning in 2017, DFAS made some important rule changes, which in part eliminated the Colorado Hunt time rule formula and now adopts the CRS 14-10-113(5) valuation date.
17 Dividing an Annuity with a divorce QDRO. Annuities are tax-deferred insurance products which can be divided with a QDRO.
18 Division of IRAs in Divorce IRAs are not retirement plans. instead they are merely savings accounts with some tax-deferred characteristics and some minimum distribution rules. There are disadvantages, including but not limited to, such as the 10% early withdrawal penalty if cash is taken out prior to age 50.5.
19 Social Security Under Federal law, Social security benefits are not divisible in a divorce or legal separation. However, in some cases, they can be considered in the division of marital property. That is particularly true of PERA retirement benefits.
20 Child Support and Maintenance QDRO A QDRO can be used to pay for child support and/or maintenance arrears. Both arrears and future support. This is somewhat common.
21 Expert Witness for Colorado QDRO. The qualification by the Court as an expert witness is not automatic. Colorado court rules list the procedural and reporting requirements. Make sure they are followed. And there is preparation time both to cross-examine the opposing expert witness and examine your expert witness.
22 Rule 70 QDRO Enforcement Colorado Court Rule 70 can be used to have the Clerk of the Court sign the QDRO in place of either Party who is uncooperative and refuses to sign the QDRO. Attorney fees may be awarded to the innocent Party. This is a way to enforce the QDRO provisions.