STANCera

METHOD AVAILABLE TO ACTIVE AND DEFERRED MEMBERS

(Former spouse receives a percentage of each monthly payment when member retires)

If an active or deferred member's StanCERA benefit must be divided, as determined by the court or an agreement of the parties, two sample language DRO's are provided as examples of acceptable methods for dividing community property.

Either method will divide the community property interest of an active StanCERA member's account. This division allows the nonmember to receive his/her community property interest in the retirement benefit at the time benefits become payable to the member.

FIRST METHOD

If elected, this method requires the member to elect Option 4 (Government Code Section 31764) at retirement and name the nonmember as a beneficiary. Member benefits provided under Option 4 are reduced in order to provide survivor benefits to eligible beneficiaries. The community property interest is calculated by StanCERA based on what is commonly referred to as the "time rule" or "Brown formula". However, the parties may provide another method of allocating the member's retirement benefits provided the method is consistent with the terms of the 1937 Act and other applicable laws.

The Brown formula is as follows:

Non-members allocated monthly benefit

=

No. of months StanCERA service between marriage date & separation date

No. of months of StanCERA service at retirement of member

X

50%

X

Member's retirement allowance

If the member predeceases the nonmember, the nonmember would continue to receive a monthly community property benefit for life.

After monthly retirement benefits have begun, if the nonmember dies before the member, the nonmember's community property monthly benefit would stop and revert to the plan. If the DRO specifically states that the nonmember's community interest reverts to the member or continues to beneficiaries or heirs, an actuarial reduction in the retirement benefit is required at the outset of receiving the retirement benefit payments.

The selection of Option 4 still allows the member, at retirement, to name another lifetime beneficiary for any remaining portion of the retirement benefit. Certain plan limitations may affect the amount available under this option to another lifetime beneficiary. For example, an additional actuarial reduction is required at the outset in order to provide a lifetime benefit to a current surviving spouse.

NOTE: If Option 4 is chosen, an actuarial evaluation will be required. Upon retirement, the parties will be required to pay the actuarial fee of $350.00 charged by our actuary.

SUMMARY OF FIRST METHOD OF DIVIDING COMMUNITY PROPERTY

Available to active and deferred members

SHARED PAYMENT

Retirement date and receipt of benefit payment

Member and nonmember begin to receive monthly benefits when member retires

Benefit payment options

Member must select Option 4, which provides nonmember with a lifetime benefit based on his/her percentage interest in member's retirement.

Member or nonmember dies before retirement

If member has not remarried, nonmember receives community property percentage interest in death benefit.

If member has remarried, the court reserves jurisdiction over the nonmember's entitlement to monthly benefit of the surviving spouse.

Member or nonmember dies after retirement

Member's death: Monthly continuance available to beneficiary if named at date of retirement; nonmember's benefit is not affected by member's death.

Nonmember's death: Monthly benefit will stop. An actuarial provision must be made for continuance to member or beneficiary.

SECOND METHOD

This method allows the member to elect Government Code §31760, which provides an unmodified benefit. This allows a non-member to receive his/her community interest in the retirement benefit at the time the benefit becomes payable to the member. However, the non-member's community share shall terminate upon the death of the member. If the member leaves an eligible surviving spouse, a portion of the survivor's allowance may be payable to non-member upon further order of the court.

This method also uses the "Brown formula" to calculate the community property interest.

SUMMARY OF SECOND METHOD OF DIVIDING COMMUNITY PROPERTY

Available to active and deferred members

SHARED PAYMENT

Retirement date and receipt of benefit payment

Member and nonmember begin to receive monthly benefits when member retires

Benefit payment options

Member may elect Government Code §31760, which is an unmodified benefit. This will provide non-member a percentage interest benefit in member's allowance.

Member or nonmember dies before retirement

If member dies and has not remarried, nonmember receives community property percentage interest in death benefit.

If member has remarried, the court reserves jurisdiction over the nonmember's entitlement to monthly benefit of the surviving spouse.

If non-member dies, his/her beneficiary will be entitled to the community property share upon the member's retirement.

Member or nonmember dies after retirement

Upon death of member, non-member's monthly benefit will stop. If member leaves an eligible spouse, the non-member may petition the court for a share of the survivor's allowance.

Upon non-member's death, the monthly benefit will stop.

NOTE: Purchased service credit requires special consideration for either method of division. Contact StanCERA for further information.

METHOD AVAILABLE TO RETIRED MEMBERS

For retired members who are receiving a benefit, a sample language DRO is provided as an acceptable method of dividing community property.

The retirement benefit option a member elects at retirement cannot be changed. If the member's marriage is dissolved after retiring, the member's retirement benefit is reduced to provide retirement income to the nonmember based on the percentage or formula provided in the DRO.

If the retired member dies first, the nonmember is no longer eligible to receive a retirement benefit. A nonmember is not considered a surviving spouse for any purpose under the 1937 Act; therefore the nonmember community interest terminates upon the death of the retired member.

If the nonmember dies first, the portion of the retired member's benefit payable to the nonmember will continue to be paid to the nonmember's estate or designated beneficiary during the member's lifetime.

A DRO can be structured to divide the member's retirement payments until the member's death. A DRO can also address how any applicable lump sum death benefits are to be divided.