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Divorce &IPERS BenefitsQualified Domestic Relations Orders

Divorce &IPERS BenefitsQualified Domestic Relations OrdersDivorce can affect IPERS benefits. If you are divorcing, this brochurecontains important information for you.This booklet briefly explains certain rights and benefits of IPERS membership. It isnot a substitute for federal and state laws governing IPERS, which provide completeinformation and are subject to change. Although IPERS makes every attempt to ensureits materials are accurate and up to date, any conflict between the contents of thebooklet and law must be resolved in favor of the law. The Member Handbook providesa more detailed description of IPERS benefits. It is available on the IPERS website.

QDROs and IPERS’ RoleA Qualified Domestic RelationsOrder (QDRO) is a special court orderindividuals obtain following a divorceproceeding that specifies how theirpension assets will be divided. It isnot an alimony award.A QDRO is not necessary in everydivorce. If you and your former spousecan agree to divide other maritalproperty equitably, then you maynot need to divide IPERS benefits orsubmit a QDRO.An IPERS QDRO is a court order. If anorder has not been signed by a judgeand filed in accordance with applicablelaws and procedures, the order maybe a domestic relations order, but itwill not be an IPERS QDRO. An IPERSQDRO must satisfy the requirementsof Iowa Code section 97B.39 and 495IAC 16.2 (97B). The person who isawarded a share of your IPERS benefitis referred to as an “alternate payee.”What Is IPERS’ Role? IPERS provides IPERS benefitsto you and the alternate payeeaccording to the terms of theQDRO and applicable tax laws. IPERS does not represent eitherparty and cannot give legal adviceto you or the alternate payee.As you begin to prepare a QDRO,it is a good idea to use IPERS’Model QDRO, which is availableon www.ipers.org on the MembersForms page as part of IPERS’ QDROInstruction Packet. The Model includesmandatory and optional provisions,a summary of the legal requirements,and many practical tips on how todraft an IPERS QDRO. Use of theModel and guidelines therein willhelp speed up IPERS’ review of yourproposed QDRO and, later, acceptanceof your final order for qualification.Qualified Domestic Relations Orders (QDROs)1

Effect of QDROs on IPERS BenefitsAn IPERS retirement benefit is generallydependent on four factors: Age at retirementQuarters of covered employmentHighest average salaryClassification as a Regular or Specialservice memberIPERS retirement benefits are paid asa monthly, lifetime annuity. IPERSoffers various benefit payment options.For more information, see the “Readyto Retire?” booklet or the MemberHandbook available on the IPERSwebsite at www.ipers.org.The Model suggests three methodsof dividing a member’s benefit(all considered “shared payment”methods): The straight percentage method The service factor method* The sum-certain methodPlease review these paragraphs inthe Model, and if you have furtherquestions, contact IPERS’ QDROAdministrator at 515-281-7623.*If you choose the service factor method,here’s how the factor is calculated:Shared Payment MethodsIPERS accepts only a “shared payment”method for dividing benefits. Thatmeans the actual benefit paymentsmade to the member and alternatepayee (and if applicable, payments tobeneficiaries) are split. The alternatepayee cannot receive any paymentsuntil the member begins to receivepayments. If the member is alreadyretired, the alternate payee may beginto receive a share of the benefit after theQDRO is accepted by IPERS.IPERS does not have the ability to valuethe member’s account and divide it intotwo separate accounts. Accordingly, aQDRO cannot give an alternate payeethe right to receive a portion of themember’s accrued retirement benefit ata time or in a form different from thoseelected by the member.2Divorce and IPERS Benefits% Quarters of IPERScovered employmentduring the marriageperiod or a number thatis agreed uponTotal quarters of IPERScovered employmentused in calculatingbenefitsIPERS Does Not ProvidePresent Value CalculationsIPERS does not provide lump-sumpresent value calculations of themember’s accrued retirement benefits.The parties may stipulate the value ofpension benefits that will be treated asmarital property, or obtain a presentvalue calculation from an independentexpert. IPERS will accept reasonablerequests for information to use inpreparing these calculations.

Updating Beneficiary InformationBeneficiary DesignationIf the member is still legallymarried, the member cannot changebeneficiaries without the writtenconsent of his or her spouse.IPERS Does NotWrite QDROsAfter a QDRO that divides deathbenefits has been filed and acceptedby IPERS, the member may be ableto designate a new beneficiary for themember’s portion of death benefitsby completing a new Enrollment/Beneficiary Designation form.You or your attorney shouldcontact IPERS when draftingyour QDRO. IPERS can reviewyour proposed QDRO to helpensure it can be administeredas intended. IPERS will prepare achecklist indicating how IPERS willinterpret the proposed QDRO.The member would first designate thealternate payee as a beneficiary andindicate that benefits are being or willbe paid according to the terms of theQDRO. Sample language is providedon the back of the form. Otherbeneficiaries could be designated forthe remaining benefits.IPERS encourages you or yourattorney to use IPERS’ ModelQDRO and submit the draft toIPERS’ QDRO Administrator withthe required Administrative RuleCompliance for QDROs form.It is possible that the member maybe unable to change beneficiariesdepending on the terms of the QDRO.Qualified Domestic Relations Orders (QDROs)3

Avoiding Common QDRO MistakesYou and your attorney can avoid themost common mistakes by keepingthese points in mind: IPERS is a governmental plan notsubject to the Employee RetirementIncome Security Act (ERISA).A QDRO tailored to meet ERISArequirements submitted to IPERS willbe rejected without review. You and your attorney mustthoroughly review all availableIPERS background material. You and your attorney shouldrequest current benefits statementsand pension estimates from IPERS toshow your available benefits. Always use standard, unambiguousterms and formulas fordividing benefits. Carefully review all the optionalparagraphs for possible inclusionin the QDRO. If your QDRO doesnot address an optional paragraph(for example, dividends or deathbenefits), the alternate payee has noright to that payment.4Divorce and IPERS Benefits Consider placing limits on thespecific benefit payment optionsthat can be chosen when themember retires, because someof the options could preclude thefull implementation of the divorcedecree. For example, the alternatepayee may be precluded fromreceiving death benefits if the QDROpermits the member to choose arefund or a retirement option with nodeath benefit. Consider whether the QDRO shoulddivide death benefits. If deathbenefits are not addressed in theorder, the alternate payee has noright to any share of death benefits. A QDRO cannot require IPERS tomake benefit payments in a mannernot permitted under IPERS’ rules. Ask your attorney to contactIPERS’ QDRO Administrator toreview your proposed draft QDROfor preapproval. This will help theparties avoid prohibited termsand conditions.

Commonly Asked QuestionsHow can my IPERS benefit Can I change mybe divided in a QDRO?beneficiary before I’mThere are three basic methods oflegally divorced?dividing a member’s IPERS accountin a QDRO:You will need your spouse’s consent tochange your beneficiary before you arelegally divorced. If your spouse willprovide his or her consent, you canchange your beneficiary. Otherwise,once you are legally divorced you mayupdate your beneficiary information.For more information, review IowaCode section 598.20B. Straight percentage method Service factor method Sum-certain amount methodSee the Model QDRO (availableon the IPERS website) formore information.Can IPERS’ GeneralCounsel Office draft aQDRO for the parties?Does IPERS maintaina separate accountfor the alternate payeeafter the QDRO is filedand accepted?No. Under a shared paymentmethod, the member’s accountcannot be subdivided.When will an alternatepayee receive his or hershare of an IPERS benefit?The alternate payee receivespayment of his or her portion ofIPERS benefits at the same timeas the member (or beneficiaries).No, IPERS’ general counsel officeonly reviews QDROs and will letyou know how they will beinterpreted. You must work withyour attorney to draft your QDRO. Besure to have your attorney review theModel QDRO and submit the requiredAdministrative Rule Compliance forQDROs form.Is a QDRO alwaysnecessary in cases ofdivorce?No. If you and your spouse mutuallyagree that the value of your IPERSbenefit can be offset by other maritalproperty, your IPERS retirementbenefit may remain entirely with you,and a QDRO will not be needed.Qualified Domestic Relations Orders (QDROs)5

About the IPERS PlanIPERS Is aGovernment Plan NotSubject to ERISAIPERS does not accept ERISAtailored QDROs. To facilitatethe approval of a QDRO,you or your attorney shouldcontact IPERS before draftinga QDRO.6Divorce and IPERS BenefitsIPERS is a “defined benefit” retirementplan. Being a defined benefit planmeans IPERS uses a set formula tocalculate benefits when a memberretires. Dividing such a benefitinvolves more complexity thandividing accounts maintained underdefined contribution plans, such asIRAs or 401(k)s.

QDRO ChecklistYou or your attorney should contact IPERS before drafting your QDROto obtain IPERS’ QDRO Instruction Packet. The packet is available on theIPERS website at www.ipers.org on the Members Forms page.IPERS is a governmental pension plan exempt from ERISA, the federallaw that governs the division of pension benefits for private sector plans.IPERS’ QDRO requirements are different from those of ERISA-mandatedplans, so it is important for your attorney to understand and follow IPERS’QDRO rules. Request a benefit estimate. Update your beneficiary afterThis estimate will be helpfulwhen drafting a QDRO. Theestimate shows availablebenefit payment options andestimated benefit amounts.the QDRO is finalized andapproved by IPERS. See page3 for more information. Call us with questions Ask IPERS to review yourproposed QDRO beforetaking it to court to makesure it can be administered.The proposed QDRO canbe faxed to 515-281-0045,Attention: QDRO Administrator.at 515-281-0020 or toll-freeat 1-800-622-3849 and askfor the QDRO Administrator.Qualified Domestic Relations Orders (QDROs)7

The IPERS Pension Plan vs.Defined Contribution Plans:What’s the Difference?IPERS(Defined Benefit Pension Plan)8GuaranteedBenefitYES.Your benefit is guaranteed for life, no matter how long you live, and nomatter how the investments perform.MonthlyBenefitsSTABLE.Your benefit amount is determined by a formula based on your years ofservice and your average salary. Once determined, your benefit amount willnot change.Vesting100% in your contributions.Once you become vested, you gain access to a greater percentage ofyour employer’s contributions with each year you contribute to IPERS.Requirements for becoming vested changed 7/1/12, to 7 years of service,or when you reach age 65 while in IPERS-covered employment.DisabilityBenefitsYES.IPERS provides disability benefits if you meet certain qualifications.DeathBenefitsYES.IPERS provides pre- and postretirement death benefits. Beneficiariescan roll over IPERS death benefits to qualified retirement plans.Divorce and IPERS Benefits