Marriage and divorce can have an impact on your pension plan. Here we describe general rules that apply. Because pensions don’t all follow the same rules, it is very important to read your Summary Plan Description to know for sure what rules apply to your situation.
Marriage and Pensions
Note: The following rules only apply to pension plans that offer “surviving spouse benefits.” That means a pension plan that allows your spouse to get some or all of your pension after you die.
Some plans offer “designated beneficiary benefits” instead, which follow slightly different rules. When relevant, we highlight the differences below. If you are unsure about which type of benefit you have, ask your employer whether your plan offers spousal survivor benefits or designated beneficiary benefits.
What does my pension plan have to do with my spouse?
Many pension plans give you the choice to leave most or some of your pension money to your husband or wife if you die before them.
Although not a party to your pension plan, your spouse may play an important role when choosing your pension plan. Many plans require that your spouse be informed when making any choices about your retirement plan. This means that you will need to tell your spouse which plan you are choosing.
What happens to my pension if I get married or remarry?
This will depend mostly on whether you marry before or after you begin collecting your pension.
Before You Begin Collecting Your Pension: If you marry or remarry before you begin collecting your pension, you can ask your employer’s human resources department or plan administrator to update your plan. Unless a former spouse has a Qualified Domestic Relations Order from a divorce (see the section on QDROs below), you will be able to add your new spouse to your pension plan.
Example: Mark is married to Jim. He is Mark’s second husband. Mark’s earlier divorce did not include a QDRO. Mark has not started receiving his pension. He is able to designate Jim to receive his pension as a surviving spouse.
Example: Tom received a QDRO based on Kristen’s pension when he and Kristen divorced. When Kristen married Sheila, she could name Sheila as the surviving spouse in her plan. Her marriage would not affect the amount Tom will receive when she retires.
Keep in mind that some plans have rules on how long you must be married before being able to add your spouse to your pension plan. Ask your employer if they have any rules like this.
After You Begin Collecting Your Pension: Once you begin receiving your benefit, the terms that you and your employer agreed upon have been set and generally cannot be changed. This means that if you were single when you started collecting your pension, you cannot add a new spouse to your plan. And if you are remarrying after you had selected the surviving spouse option, that option will be locked in with the former spouse.
Example: Peter is unmarried. Peter begins receiving his pension as a single life annuity. Even though Peter marries Brenda a few months later, he will not be able to add Brenda to his plan because he is already receiving his pension.
I am a widow/widower and I collect my late spouse’s pension. What will happen if I remarry?
When a surviving spouse remarries, this will often prevent them from continuing to receive their late spouse’s pension. This means that if you are collecting your deceased spouse’s pension and you choose to remarry, you may lose the right to get your former spouse’s pension.
Example: Sarah is a widow living off of their late husband’s pension. Sarah decides to marry Ron. Sarah can no longer collect their late husband’s pension, because the terms of their late husband’s pension do not allow for continuation upon remarriage.
If the plan offers a designated beneficiary option instead of a surviving spouse option, your decision to remarry will not affect your right to receive benefits.
Divorce and Pensions
Note: These are general rules. You will always want to consult a divorce lawyer to understand what options are available to you.
How can a divorce affect a pension?
A divorce can change how a pension is paid out and to whom the pension is paid. During the divorce proceeding, one of the parties may request that the court grant a Qualified Domestic Relations Order (QDRO) against the other party. The QDRO enables a former spouse to receive part of the other spouse’s pension.
How do I get a QDRO?
The time to get a QDRO is during the divorce proceedings. Pensions are often a forgotten source of marital property, so be sure to raise the question with your divorce lawyer or with the court if you do not have a lawyer.
How does having a QDRO change things for my pension?
A QDRO changes many things. If there’s a QDRO and you begin collecting your pension, the money that goes to your former spouse under the QDRO will be automatically taken out and given to your former spouse. If you divorce after you have already begun to collect your pension, the QDRO will go into effect immediately.
Additionally, having a QDRO gives the former spouse the right to the same information about the pension as the spouse who earned the pension. This means that the former spouse may request a Summary Plan Description and must be kept informed on the plan. The plan will treat a former spouse with a QDRO the way they treat the spouse who earned the pension.
This also means that if you want to take a lump sum offer on your pension, you must first receive permission from your former spouse. Your former spouse will receive the amount of the lump sum equal to the amount of their rights in your pension.
Example: Under the divorce decree, Rachel has a 50% interest in Roberta’s pension. Roberta wants to take a lump sum offer, so she (or her attorney) must contact Rachel to receive her permission to do so. Rachel will then receive half of the lump sum amount.
|Lump sum offer||$100,000|
Where can I get advice on divorce and pensions?
The National Pension Lawyers Network (NPLN) helps connect consumers with pension lawyers. The lawyers can provide legal advice about pension litigation and help finding a divorce attorney who is knowledgeable about pension rights. You can visit their website or call them at 1-888-420-6550. Note: You will be put in contact with a pension lawyer for free; however, the lawyer will not handle your case for free.