Remarriage Restrictions and Pension Payments

All retirement transfers and payments must be handled carefully.  It is critical that the parties be advised of additional steps they may need to take beyond getting the QDRO prepared and submitted. Many of these steps are simple, such as having the alternate payee provide his/her account information in order to receive the funds.  Without this,  the plan may not be able to make payment at all or will withhold an improper amount of taxes if the correct forms are not submitted.

A very important rule that some pension plans have is a restriction regarding the remarriage of the former spouse. Typically, the restriction is that if the former spouse remarries prior to reaching a certain age, then the payments to the former spouse of his/her share of the employee’s annuity (during the employee’s lifetime) will terminate. Under certain plans, the payment can be resumed upon proof that the former spouse’s subsequent marriage has ended by death or divorce. With other plans, the payment cannot be resumed and is in fact terminated forever. If a former spouse is relying heavily on these payments, this is a very important piece of information that should be conveyed to the client not only in discussions to ensure they understand but also with a follow-up written communication. The follow-up letter will serve as a reference to the client and also help protect the attorney from a potential malpractice claim. Since the income received from a spouse’s pension is typically a substantial sum to the former spouse, the recipient must be put on notice of any decisions that could impact their ability to receive such funds.

Another consequence of remarriage before a certain age is that some plans will terminate a survivor benefit award that may have been made to the former spouse. Some plans will terminate the survivor benefit award forever, whlle others will allow it to be resurrected upon proof that the subsequent marriage has ended by death or divorce. A warning to the client verbally and a follow-up in writing is similarly important here for the same reasons as those listed above.

Some former spouses will receive a minimal share of a pension plan and/or survivor benefit to secure their entitlement to health insurance coverage. For these former spouses, a remarriage may not be important in terms of the income they expect to receive but very important as it relates to other benefits, such as health insurance. If they remarry and lose their survivor benefit, then they could also lose their entitlement to these other benefits.

Here are some examples of plans with remarriage restrictions:

Federal Employees’ Retirement System and Civil Service Retirement System: If the former spouse remarries before age 55, then they will lose their survivor benefit unless they were married to the employee for 30 years or more. If the former spouse’s subsequent marriage ends by death or divorce, they can reinstate their entitlement to the survivor benefit.

Military Pension: If the former spouse remarries before age 55, then they will lose their survivor benefit. If the former spouse’s subsequent marriage ends by death or divorce, they can reinstate their entitlement to the survivor benefit.

Foreign Service Pension System: If the former spouse remarries before age 60 they will lose their entitlement to the employee’s annuity (during the employee’s lifetime) forever. Entitlement to a survivor benefit will be terminated, however it can be reinstated if the subsequent marriage ends in death or divorce.

Other plans such as the Inter-American Development Bank Staff Retirement Plan require that the parties determine whether payment to the former spouse will be impacted by their remarriage.

What about the remarriage of the employee/participant?

The Inter-American Development Bank Staff Retirement Plan will require that the parties determine whether payments to the former spouse will be impacted by the participant’s remarriage. This is rare. 

For most plans, the remarriage of the participant does not impact payment of the employee’s annuity or the survivor benefits to the former spouse if all paperwork has been timely submitted and accepted.

With a military pension, the former spouse must be designated within one-year from the date of divorce to receive the survivor benefit. If not, when the military member remarries, the new spouse will automatically be the beneficiary of the survivor benefit on the one-year anniversary of their marriage to the military member.

Other plans may not impose any impact on the former spouse if the participant remarries. For the participant though, they will want to look into timely designating the new spouse for any survivorship benefits – even if the full amount was awarded to the former spouse. This is because some plans, like FERS and CSRS will allow the new spouse to be a sort-of back-up designee, in the event the former spouse dies before the participant – then the new spouse will be the recipient of the survivor benefit upon the participant’s death.

Overall, the key takeaway here is that all plans are different and have their own rules. These rules may cause major changes to a participant or former spouse’s benefit, and therefore the attorneys must ensure that the parties are carefully advised of all the potential implications of their future actions.