Presentation Date: Thursday, April 25, 2024
Title: Navigating Social Security Benefits in Divorce and Retirement
Presenter: Mike Miller, CFP®
763.201.1390 | mike@integrashieldfinancial.com
Website: www.integrashieldfinancial.com
Description of Program:
This training will focus on helping attorneys improve their knowledge and understanding of Social Security and how divorce and retirement will impact their clients’ potential benefits.
We will briefly discuss the history of Social Security and its expansion in 1939. We will look at the value of Social Security and the application of Cost-of-Living Increases over time.
There will be a special focus on Social Security spousal benefits, divorced spouse benefits, survivor benefits and divorced survivor benefits including the requirements to qualify for these benefits. Though these benefits apply to all ages they are especially impactful in gray divorces.
Taxation of Social Security benefits will be discussed along with the unique provisions of the Windfall Elimination Provision and the Government Pension Offset.
We will briefly discuss Income Related Monthly Adjustment Amounts for Part B Medicare Premiums and exceptions for life changing events such as divorce.
Time:
11:30 AM Attendees arrive/Lunch served
11:50 AM Announcements and introductions
12:00 PM – 1:00 PM Presentation
Location: 3300 Edinborough Way, Edina, MN 55435, 1st Floor Training Room
Cost:
CLI Members and non-members: $25
CLI Student Members and CLI Emeritus Members: $10
Annual Partners: $0
Continuing Education:
1.0 credit PENDING MN CLE
Certificate of attendance for self-filing for MN Board of Psychology, LMFT, LICSW & ADR.
Cancellation: Refunds for registration will be processed if notice of cancellation is received by 4/18/24.
Who Should Attend: CLI Members, Family Law Professionals
Educational Level: Overview
Training Committee Chairs:
Louise Livesay-Al | louise@livesaylawoffice.com
Rebecca Randen | rebecca@rcglawoffice.com
For questions on registration contact: Sandy Beeson: cli@collaborativlaw.org
A qualified domestic relations order (QDRO) is not to be confused with a divorce decree or property settlement agreement. A QDRO specifically recognizes a spouse, former spouse, child, or other dependents’ right to receive a predefined portion of a qualified ERISA-sponsored retirement plan. A QDRO must be issued by a state court or authority.
To “qualify” as a QDRO under the Employee Retirement Income Security Act (ERISA), a QDRO must have (or not):
- The name and last known mailing address of the participant and each alternate payee;
- The name of each plan to which the order applies;
- The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee;
- The number of payments or time period to which the order applies;
- The order must not require a plan to provide an alternate payee or participant with any type or form of benefit, or any option, not otherwise provided under the Plan;
- The order must not require a plan to provide for increased benefits (determined on the basis of actuarial value);
- The order must not require a plan to pay benefits to an alternate payee that are required to be paid to another alternate payee under another order previously determined to be a QDRO; and
- The order must not require a plan to pay benefits to an alternate payee in the form of a qualified joint and survivor annuity for the lives of the alternate payee and his or her subsequent spouse.
With that, a QDRO must also “qualify” under the terms and conditions of the specific retirement plan. All retirement plan is different, and some have unique terms and conditions such as annual vs. daily valuations dates, ROTH contributions, frozen benefits, vesting requirements, shared vs. independent options, survivors benefits, and timing requirements. Each retirement plan is required to have written QDRO procedures and model language available to Participants upon request but watch out! The model language is designed to protect the interests of the Plan, not the Participant, and never an Alternate Payee. It is suggested you understand the terms and conditions for each account along with the ERISA requirements above, prior to any agreements or the decree language being drafted.
It should also be noted that QDROs are not specific to divorce. A QDRO can be used in several other circumstances including child support, past-due arrears, or even in other court jurisdictions where the circumstances may warrant a non-taxable transfer to a spouse, former spouse, child, or dependent. As long as a state Judge or court commissioner will sign the QDRO, it must be deemed “qualified” under the terms of the plan assuming it meets all of the requirements above.
It can be well worth the time and money to consult with a retirement plan specialist as soon as you identify the need for a Qualified Domestic Relations Order. For more QDRO tips continue to follow our blog or contact Michelle Leisen at Divorce Smart anytime.
Michelle founded Wealth Planning Group, LLC after 22 years of experience in the Financial Services Industry. Michelle graduated from the University of Minnesota,Tewin Cities and attended William Mitchell School of Law in St. Paul, Minnesota. Born and raised in Minnesota, Michelle lives in Eden Prairie with her two children Katie and Nick. Michelle enjoys volunteering and family and running races.
Divorce Financial Professional/Mediator
Divorce Smart LLC
michelle@wealthplanninggroupmn.com | 612-419-9956
www.wpgdivorcesmart.com
- Beneficiaries will see a 2.8% increase in payments
- Maximum taxable earnings will increase to $132,900
- Maximum benefit at full retirement age increases to $2,861 per month
- Estimate the tax liability now and include and allocate it as part of the property division.
- Include language to share in the tax liability when return(s) are filed next year.
- Consider whether it makes sense to load-up itemized deductions from the year to the higher earning spouse to help offset liability (i.e. real estate taxes, mortgage interest, charitable contributions).
- Be open and honest with those closest to you.
- Be grateful.
- Focus on the positives ahead.
- The tax liability is projected during the divorce process and an adjustment is worked into the property division.
- The spouse who received the 1099 adds the investment income to their tax return and language is added to the decree outlining the agreement on how to share the tax liability at tax filing time.
- The spouse who received the 1099 can “nominee”the correct portion of investment income to the other spouse by filing a 1099 and 1096 with the IRS and furnishing a 1099 to the other spouse.
- Paying off the highest interest rate credit card first, or
- Paying off the smallest balance first, then applying that payment amount to the next smallest balance