The Colorado PERA retirement benefit is very complicated when divided in a Colorado divorce.
First, make sure you understand the basic issues.
a. At full retirement, the Participant has a choice between: (i) a lump sum withdrawal similar to a 401(k); or (ii) either a money purchase account or a defined benefit pension, whichever is the greater of the two.
b. Under (ii) above, PERA decides which of the two the Participant will receive. That is not the Participant’s decision. The Participant may not even be entitled to the defined benefit plan.
c. PERA Participants do not pay into social security and do not receive social security benefits. The portion of the PERA benefit which is assigned in a divorce or legal separation should not include the social security offset or replacement portion.
d. PERA does not match Participant payroll contributions at 100% until full retirement is reached. Full retirement is either (i) age 65; or (ii) a combination of age and years of service. The match is zero up to five years of service. in a divorce or legal separation, the match should be fixed at the date of the Decree match amount.
e. PERA accounts do not include earnings. Instead a current 3%/year interest is paid.
f. PERA does not include a survivor benefit on account of the DRO. The Participant has to be living in order for the Alternate Payee to receive anything from a DRO.
g. PERA’s “check the box” formulas are very unfair.
h. Accordingly, to be fair to both the Participant and the Alternate Payee, an alternative agreement should be word processed and included as page 7 to PERA’s DRO Agreement.
i. The PERA DRO and Agreement must be approved by the trial court Judge within 90 days of the date of the Decree. There are some ‘fixed” if this is missed such as the vacation of the Decree and reissuance of it.