Divorce for Tier One/Tier Two members

Court orders may allow for a separate Tier One/Tier Two account to be established in an alternate payee’s (AP)/former registered domestic partner’s (RDP) name.     

The court order and divorce forms must do the following:      

• State that the award will be placed in a separate account in the AP’s/former RDP’s name.
• Specify what percentage of the member’s account or flat dollar amount is to be awarded to the AP/former RDP.
• Provide the date of annulment, separation, divorce, dissolution of registered domestic partnership or property settlement, as this will be used as the award date.
  • If an alternate award date should be used, it must be provided and must not be a future date. If no date is provided, PERS will use the date the judge signed the court order as the award date. The AP’s/former RDP’s separate account will be established from the member’s account balance as of December 31 of the year prior to the award date. If the award date is December 31, the account will be established as of that date.

Employer-matching dollars

Employer-matching dollars are part of a PERS member’s benefit but are separate from the member’s PERS account.      

The court order or divorce forms must specify what is to happen with the employer funds:     

• If employer funds are to be awarded to an AP/former RDP, the order and forms must state that the AP/former RDP will be awarded the funds.
• If the award does not include employer funds, the order and forms must state the AP/former RDP will not be awarded the funds.

If employer funds are not addressed, PERS will reject the court order as nonadministrable for PERS purposes.      

Note: Employer funds are not paid until retirement. If a member or AP/former RDP withdraws their account, their share of employer funds are forfeited and not paid to anyone.      

For additional restrictions related to Separate Account awards to a former registered domestic partner, read the “Registered domestic partnerships section” below.      

Death before retirement

Member dies

Typically, Separate Account awards do not contain member beneficiary restrictions. Any such restrictions would need to be included in the court order on the PERS Tier One/Tier Two Beneficiary Restrictions form.      

Upon the member’s death, any undistributed Separate Account Award to a former RDP would require immediate distribution.     

Important: If the member has a Tier One/Tier Two beneficiary form on file that specifically names the member’s former spouse/RDP, the former spouse/RDP will continue to be the member’s beneficiary unless the court order contains beneficiary designation requirements or revocation language specific to PERS. If the member wants to change beneficiaries, the member needs to submit a new beneficiary form.
     

AP/former RDP dies

Separate Account awards do not contain AP/former RDP beneficiary restrictions.     

If an AP/former RDP receiving a Separate Account Award dies before retirement, the AP’s beneficiaries will be eligible for employer-matching death benefits if the member was eligible to receive them had the member died (hypothetically) on the same day as the AP/former RDP. This point does not need to be negotiated or contained in the divorce decree. It is automatically provided by law in Oregon Revised Statute 238.465 (4).      

The AP’s/former RDP’s death benefit will be payable to the AP’s/former RDP’s designated beneficiaries. If a valid designation is not on file with PERS, or the AP’s/former RDP’s beneficiaries die before the AP/former RDP, the AP’s/former RDP’s benefit will be payable per statute in the following order: the AP’s/former RDP’s surviving spouse, the AP’s/former RDP’s surviving children, or the AP’s/former RDP’s estate. APs/former RDPs should complete an Alternate Payee PERS Tier One or Tier Two Preretirement Beneficiary Designation form.      

Post-retirement death

Member dies

Typically, Separate Account awards do not contain member retirement option or beneficiary restrictions. Any such restrictions must be included in the court order on the PERS Tier One/Tier Two Beneficiary Restrictions form. Post-retirement death benefits will be paid in accordance with the retirement option and beneficiary selected by the member.      

AP dies

Separate Account awards do not contain AP beneficiary restrictions once the AP’s separate account has been established. Post-retirement death benefits will be paid in accordance with the retirement option and beneficiary selected by the AP.     

Member withdrawals

If an AP has been awarded a separate account, there are no divorce-related restrictions on the member withdrawing. If a member withdraws their account, their share of employer funds is forfeited and not paid to anyone. The member’s withdrawal will not impact the AP’s separate account. The member’s withdrawal requires any undistributed Separate Account Award to a former RDP to be distributed immediately.     

Alternate payee withdrawals

If an AP has been awarded a separate account, there are no divorce-related restrictions on the AP withdrawing. If the AP was awarded employer-matching funds, the funds will be forfeited and not paid to anyone, should the AP withdraw. The AP can withdraw at any time prior to the member becoming eligible for retirement. The AP’s withdrawal will not impact the member’s account.      

For information and restrictions on former RDP withdrawals, read the “Registered domestic partnerships section” below     

Information about the AP’s separate account

An account established in the AP’s/former RDP’s name will accrue Tier One or Tier Two earnings until benefits are paid.     

The AP can submit an application to begin receiving retirement benefits when the associated member reaches earliest retirement eligibility* regardless of when the associated member actually retires.      

The AP cannot elect a retirement date earlier than the first day of the month following the month in which the application is received by PERS. The retirement date must be on or after the effective date of the court order.      

An AP/former RDP with a separate account cannot participate in the variable annuity program.      

The AP will be able to choose a retirement option based on their lifetime.     

For more information, read the “Member and alternate payee retirement benefit options” section below.     

For information and restrictions on a former RDP’s separate account, read the “Registered domestic partnerships section” below.     

AP/former RDP benefit paid directly from the member’s benefit

Court orders may allow for the alternate payee (AP)/former registered domestic partner (RDP) to receive a benefit withheld directly from each benefit received by the member and possibly the member’s beneficiary.      

The court order or forms must award benefits by:     

• A direct percentage to be withheld from the member’s actual benefit payments.
  
• A percentage of a married time ratio resulting in a percentage to be withheld from the member’s actual benefit payments (only available for nonretired members).
  OR
  
• A specific dollar amount to be withheld from the member’s actual benefit payments.

PERS cannot administer an award that combines a percentage and a dollar award.      

When an award pays the AP/former RDP directly from the member’s benefit, the AP/former RDP will receive payment at the same time as the member’s withdrawal, death, service retirement, or disability retirement benefits become payable, as provided for in the court order. This award method also allows for restrictions to be added requiring a member to elect a specific benefit payment option and beneficiary at retirement.     

Reduction benefits are paid for the lifetime of the member and possibly the member’s beneficiary’s lifetime, as directed by the court order. Deduction benefits are only payable for the member’s lifetime due to taxation issues. In either case, a separate account will not be established in the name of the AP.     

Reduction awards converted to Separate Benefit awards

Some Reduction awards are converted to Separate Benefit awards; review the Separate Benefit Award section for details.     

If an AP has the choice of receiving a Reduction or a Separate Benefit Award and chooses Separate Benefit, the AP must submit an Alternate Payee Tier One/Tier Two Benefit Application requesting benefit distribution. Once the AP’s Separate Benefit is established, the member is released from all preretirement beneficiary restrictions and retirement option/beneficiary restrictions. The release triggered by the application submission is irrevocable once accepted by PERS.      

Death before retirement

Member dies before the AP/former RDP

The court order may state that the AP/former RDP is beneficiary for:     

• A specific percentage of the death benefits.
• A percent of the awarded married-time ratio of the death benefits.
  OR
• The member is not required to name the AP/former RDP as a preretirement beneficiary. If the AP/former RDP is not designated as a preretirement beneficiary and the member dies before retirement, the AP/former RDP will receive no benefits. Important: If the member has a Tier One/Tier Two beneficiary form on file that names the member’s former spouse/RDP, the former spouse/RDP will continue to be the member’s beneficiary unless the court order contains beneficiary designation requirements or revocation language specific to PERS. If the member wants to change beneficiaries, the member needs to submit a new beneficiary form.

AP/former RDP dies before member

The court order may state that the AP/former RDP award:     

• Reverts to the member — 100% of benefits will be payable to the member.
• Be paid to the AP’s/former RDP’s beneficiary as a Reduction or Deduction from the member’s retirement benefit when the member retires. For Reduction awards that are payable to the AP’s beneficiary from the member’s retirement benefits, the court order also should state whether the AP benefit continues to be paid to the AP’s beneficiary after the member’s death, if the member has selected a retirement option with death benefits. (A Deduction benefit cannot be paid to an AP/former RDP or to the AP’s/former RDP’s beneficiary from the member’s beneficiary benefit.)

Death after retirement

Member dies before the AP or former RDP (five possible situations)

A Police and Firefighter (P&F) member dies before the AP/former RDP

If a P&F member dies before their AP/former RDP and the member has a surviving spouse or minor children, an additional death benefit is available to the survivors of certain P&F members under Oregon Revised Statute (ORS) 238.405. In this situation, the court order may provide that:
     

• The additional death benefit be paid solely to the member’s surviving spouse or minor children.
  OR
• The AP/former RDP may be designated as beneficiary for a percentage of the benefit, to be paid to the AP/former RDP for the life of the member’s surviving spouse or until the member’s minor children reach the age of 18.

AP/former RDP dies before member

The court order may provide that the AP/former RDP award:     

• Revert to the member, with 100% of benefits payable to the member.
• Be paid to the AP’s/former RDP’s beneficiary as a Reduction or Deduction from the member’s retirement benefit. For Reduction awards that are payable to the AP’s beneficiary from the member’s retirement benefits, the court order also should state whether the AP benefit continues to be paid to the AP’s beneficiary after the member’s death, if the member has selected a retirement option with death benefits. (A Deduction benefit cannot be paid to an AP/former RDP or to the AP’s/former RDP’s beneficiary’s from the member’s beneficiary benefit.)

Member withdrawals

If an AP/former RDP has been awarded a Reduction or Deduction, the court order must specify:     

• Whether the member is restricted from withdrawing.
  AND
• Whether the AP’s/former RDP’s award applies if the member does withdraw.
  • If the member is allowed to withdraw and does and the AP’s/former RDP’s award does apply to withdrawal, the AP/former RDP will be paid as a Reduction or Deduction at the time of the member's withdrawal.
  • If the member is allowed to withdraw and does, but the AP/former RDP award does not apply to a withdrawal, then the AP/former RDP will never receive a benefit.

If the member withdraws, employer-matching dollars are forfeited.     

Alternate payee (AP)/former registered domestic partner (RDP) withdrawals

If an AP/former RDP has been awarded a Reduction or Deduction, the AP/former RDP cannot withdraw.      

Award methods

A court order can use one of two methods to make the award:     

• A set monthly dollar amount or set monthly percentage award.
  OR
• A married time award or ratio method; this method applies only to nonretired awards.

Under the set dollar amount or set percentage method, a set amount or percentage of any benefit due is awarded to an AP/former RDP. The award is withheld from the member’s monthly benefit at the time the member retires or goes into pay status and is paid to the AP/former RDP at the same time and in the same manner as it is to the member. Set monthly dollar awards are not subject to increases, such as cost of living increases. Set monthly dollar awards are converted to a percentage of the benefit if the member receives a lump sum.      

Under the married time or ratio method, an award is calculated by dividing the married service time specified in the court order by the member’s total creditable service time when benefits are due to determine the percentage of the retirement benefit that accrued during the marriage/partnership. The resulting fraction is multiplied by the percentage awarded to the AP/former RDP. The resulting percentage is then applied against the member’s retirement benefit. This amount is paid to the AP/former RDP monthly or in a lump sum, based on the benefit paid to the member.      

Tax liability

The difference between a Reduction and a Deduction award is which party has tax liability for payments made to the AP/former RDP.     

In a Reduction Award, each party is responsible for paying taxes on the benefits they receive.      

In a Deduction Award, the member is responsible for paying taxes on all benefits paid, including the benefits paid to the AP or former registered domestic partner (RDP). The member will receive a 1099-R issued under the member’s Social Security number reporting the benefits paid to the AP or former RDP. To comply with Internal Revenue Code, a dissolution of a registered domestic partnership can provide a Deduction Award to a former RDP but cannot provide a Reduction Award to a former RDP.      

Post-retirement beneficiary change (retired members)

A member who retired under the Refund Annuity or 15-year Certain options can change their beneficiary if allowed by the court order or with their former spouse’s/RDP’s consent. If the former spouse/RDP is the current beneficiary, they will remain the beneficiary until PERS receives a new and valid beneficiary designation form — unless alternate direction is provided in the court order or PERS divorce forms.      

A member who retired under a Survivorship option (2, 2A, L2, L2A, 3, 3A, L3, or L3A) is allowed to change their beneficiary if they meet the following criteria:      

• The AP is the member’s current beneficiary.
• The court order is not a dissolution of registered domestic partnership.
• The court order specifically states the member is allowed to change beneficiary.
  AND
• The court order provides an award to the AP. (A one-time, $1 award would satisfy this criterion.)

The AP will remain beneficiary until PERS receives a valid Divorce: Post-retirement Survivorship Beneficiary Change form. The form asks for the new beneficiary’s full name, address, Social Security number, and date of birth. Age verification documents also are required for the new beneficiary.      

Once a beneficiary change is accepted by PERS:     

• The member’s monthly benefit will be recalculated based on a blended factor of the original beneficiary’s and the new beneficiary’s ages.
• The member’s monthly benefit amount may increase or decrease.
• The change will be effective on the first of the month after the month in which PERS receives a valid request to change the beneficiary, and it will be payable the first of the month following the effective date.
• The member will receive any underpayment or be invoiced for any overpayment of benefits retroactively back to the effective date.

If the member’s new beneficiary is younger than the current beneficiary, it can significantly reduce the member’s benefit. It is advisable for members to use the Divorce: Survivorship Beneficiary Changes Estimate Request form to request a benefit estimate prior to requesting a survivor beneficiary change due to divorce.      

A survivor beneficiary change due to divorce is a one-time, irreversible change. A Survivorship option beneficiary change due to divorce is final once processed by PERS and subsequent beneficiary changes are not allowed.     

If a member retired under a Survivorship Increase option (2A, L2A, 3A, or L3A) and is both eligible to change their beneficiary and is not restricted from changing to a higher-paying benefit option (aka “popping up”), the member can do either but not both. Once a beneficiary change has been processed, the member is no longer eligible to change to a higher-paying benefit option due to divorce. Once a member’s request to “pop up” has been processed, the member is no longer eligible to change their beneficiary.     

Changing to higher-paying Option 1 (retired members)

A retired member who named their former spouse as beneficiary of a Survivorship Increase option (2A, L2A, 3A, or L3A) at retirement will be allowed to request a benefit option change to the higher-paying Option 1 (aka “pop up”), if:     

• The member is divorced (not legally separated) or a former registered domestic partner.
• The member was married to the AP as of the member’s effective retirement date.
• The AP is the current beneficiary.
  AND
• The court order has not restricted the member from “popping up.”

Note: Option 1 does not provide any death benefits. As a result, if the member changes to Option 1, all benefits end upon the member’s death.      

For divorces on or after January 1, 2006, the “pop-up” effective date is the first of the month after the effective divorce date. The Option 1 benefit is payable the first of the month after the pop-up effective date.      

Barring beneficiary provisions contained within the court order, the AP will remain the beneficiary until PERS receives a request to change the benefit option to the higher-paying Option 1.      

Court orders may allow or require PERS to convert a Reduction Award into a Separate Benefit Award in an alternate payee’s (AP) name at retirement.      

• If a Reduction Award allows the AP to convert to a Separate Benefit Award or to begin receiving benefits at the member’s earliest retirement eligibility, the AP will have the option of receiving a Reduction or a Separate Benefit award.
  • If the AP has the option of receiving the award as a Reduction or a Separate Benefit and the AP does not make an election prior to PERS processing the member’s retirement, the AP will be paid a Reduction Award by default.
• If the court order requires the AP to convert to a Separate Benefit, then the AP is required to be paid as a Separate Benefit rather than having the choice of a Reduction or a Separate Benefit.
  • If a court order provides that the AP is to be paid under an option selected by the AP, provides them with option restrictions, or indicates the benefit will be based upon the AP’s lifetime, PERS will interpret the award as a required Separate Benefit, i.e., the AP will not be able to choose a Reduction.
  • If the AP is required to be paid as a Separate Benefit and the AP has not elected a retirement option by submitting a retirement application prior to PERS processing the member’s retirement, the AP benefit will be paid under the Refund Annuity option by default — unless the court order provides an alternative default.

The court order or forms must award benefits by:     

• A direct percentage to be applied to the member’s benefit calculation at the time of payment to establish the AP’s Separate Benefit.
• A percentage of a married time ratio resulting in a percentage to be applied to the member’s benefit calculation at the time of payment to establish the AP’s Separate Benefit.
  OR
• A specific dollar amount to be applied to the member’s benefit calculation at the time of payment to establish the AP’s Separate Benefit.

PERS cannot administer an award that combines a percentage and a dollar award.       

Under the Separate Benefit Award, the AP may request a benefit on or after the member’s earliest retirement eligibility but no later than the member’s retirement date, as provided for in the court order or forms.      

A separate benefit will not be established in the name of the AP until the AP applies for retirement but no later than the member’s retirement date. Separate Benefit awards will always include employer dollars because this type of award is based on the member’s benefit, not the member’s account balance. The AP will be able to choose a retirement option based on their lifetime.      

Death before retirement

Member dies before the AP’s Separate Benefit effective benefit date

The court order may provide that:      

• The AP is beneficiary for a specific percentage of the death benefits.
• The AP is beneficiary for a percent of the awarded married time ratio of the death benefits.
  OR
• The member is not required to name the AP as a preretirement beneficiary. If the AP is not designated as a preretirement beneficiary and the member dies before the Separate Benefit Award effective benefit date, the AP will receive no benefits of any kind. Important: If the member has a Tier One/Tier Two beneficiary form on file that names the member’s former spouse, the former spouse will continue to be the member’s beneficiary unless the court order contains beneficiary designation requirements or revocation language specific to PERS. If the member wants to change beneficiaries, the member needs to submit a new beneficiary form.

AP dies before retirement and before the member

The court order may state that the AP award:      

• Reverts to the member — 100% of benefits will be payable to the member.
• Be paid to the AP’s beneficiary as a Reduction from the member’s retirement benefit when the member retires. For Reduction awards that are payable to the AP’s beneficiary from the member’s retirement benefits, the court order also should state whether the AP benefit continues to be paid to the AP’s beneficiary after the member’s death, if the member has selected a retirement option with death benefits.

Member dies before retirement and after the AP Separate Benefit effective benefit date

Separate Benefit awards do not contain member preretirement beneficiary restrictions once the AP’s Separate Benefit becomes effective. Preretirement death benefits will be paid per the designation on file.      

Important: If the member has a Tier One/Tier Two beneficiary form on file that names the member’s former spouse, the former spouse will continue to be the member’s beneficiary. If the member wants to change beneficiaries, the member needs to submit a new beneficiary form.       

Death after retirement

Member dies after retirement and after AP Separate Benefit effective benefit date

Separate Benefit awards do not contain member retirement beneficiary restrictions once the AP’s Separate Benefit becomes effective. Post-retirement death benefits will be paid in accordance with the benefit payout option selected by the member.      

AP dies after AP Separate Benefit effective benefit date

Separate Benefit awards do not contain AP beneficiary restrictions. Post-retirement death benefits will be paid in accordance with the benefit payout option selected by the AP.
      

Member withdrawals

If an AP has been awarded a Separate Benefit, the court order must specify:      

• Whether the member is restricted from withdrawing.
  AND
• Whether the AP’s award applies if the member does withdraw.
  • If the member is allowed to withdraw and does and the AP’s award does apply to withdrawal, the AP will be paid as a Reduction at the time of the member's withdrawal.
  • If the member is allowed to withdraw and does, but the AP award does not apply to a withdrawal, then the AP will never receive a benefit.

If the member withdraws, employer-matching dollars are forfeited.
      

Alternate payee withdrawals

If an AP has been awarded a Separate Benefit, the AP cannot withdraw.      

If there is no award of the member’s account or benefits, the court order should state there is no award.      

Here are additional key things to know about situations in which there are no awards:     

• PERS prefers that court orders incorporate the appropriate No Award divorce form.
• No Award court orders can contain beneficiary and benefit option restrictions as provided for on the PERS Tier One/Tier Two Beneficiary Restrictions Due to Divorce or Dissolution of Registered Domestic Partnership form.
  
• Final court orders received with no mention of PERS will be interpreted as No Award and no restrictions.
• No Award, No Restriction court orders may allow members who retired under a Survivorship Increase option to change to the higher-paying Option 1 (aka “pop up”), resulting in removal of the member’s former spouse as beneficiary. (Read the “Changing to higher-paying Option 1” section for additional details.)
• Important: If a nonretired member has a Tier One/Tier Two Designation of Beneficiary form on file specifically naming the member’s former spouse/registered domestic partner (RDP), the former spouse/RDP will continue to be the member’s beneficiary unless the court order contains beneficiary designation requirements or revocation language specific to PERS. If the member wants to change beneficiaries, the member needs to submit a new designation form.
• A retired member who named their former spouse/RDP as beneficiary under the Refund Annuity option or the 15-year Certain option can change their beneficiary unless restricted from doing so by court order. Unless the court order names a new beneficiary, any previous designation will remain in effect until PERS receives a new designation of beneficiary. However, the member will need consent from the former spouse/RDP for the beneficiary change unless this point is addressed in the court order.
• A retired member who named their former spouse as beneficiary of a survivorship option (2, 2A, L2, L2A, 3, 3A, L3, or L3A) at retirement will not be allowed to change their beneficiary if the court order contains no award. The former spouse will remain the sole beneficiary.

Changing to higher-paying Option 1

A retired member who named their former spouse as beneficiary of a Survivorship Increase option (2A, L2A, 3A, or L3A) at retirement will be allowed to request a benefit option change to the higher-paying Option 1 (aka “popping up”) if:     

• The member is divorced (not legally separated) or a former registered domestic partner.
• The member was married to the former spouse as of the member’s effective retirement date.
• The former spouse is the current beneficiary.
  AND
• The court order has not restricted the member from popping up.

Option 1 does not provide any death benefits. As a result, if the member changes to Option 1, all benefits end upon the member’s death.     

For divorces on or after January 1, 2006, the pop-up effective date is the first of the month after the effective divorce date. The Option 1 benefit is payable the first of the month after the pop-up effective date.      

Under a No Award court order, the former spouse will remain the beneficiary until PERS receives a request to pop up.     

When an alternate payee (AP)/former registered domestic partner (RDP) has been awarded a Reduction, Deduction, or Separate Benefit Award, any beneficiary restrictions must be included on the appropriate divorce award form.      

The PERS Tier One/Tier Two Beneficiary Restrictions form may only be used to provide beneficiary restrictions on No Award or Separate Account awards. If restrictions are not provided on this form, then:      

• A nonretired member will be allowed to designate their own preretirement beneficiaries.
  • Important: If a nonretired member has a Tier One/Tier Two Designation of Beneficiary form on file specifically naming the member’s former spouse/RDP, the former spouse/RDP will continue to be the member’s beneficiary unless the court order contains beneficiary designation requirements or revocation language specific to PERS. If the member wants to change beneficiaries, the member needs to submit a new designation form, if not restricted.
• A nonretired member will be allowed to select any retirement option and beneficiary at retirement.
• A retired member who named their former spouse as beneficiary of a Survivorship Increase option (2A, L2A, 3A, or L3A) at retirement will be allowed to request a benefit option change to the higher-paying Option 1 (aka “popping up”) if:
  • The member is divorced (not legally separated) or a former registered domestic partner.
  • The member was married to the former spouse as of the member’s effective retirement date.
    AND
  • The former spouse is the current beneficiary.
• A retired member who elected a nonsurvivorship option (Refund Annuity, 15-year Certain, or remaining Lump-Sum Installments) will continue to have the same beneficiary as previously elected. The retiree may change their retirement beneficiary but only with the consent of their former spouse/RDP, unless this requirement is waived on the beneficiary restriction form.

When PERS distributes benefits awarded in a dissolution of registered domestic partnership, PERS is required to report the benefits paid to the former registered domestic partner (RDP) on the member’s 1099-R. The member is responsible for taxes on benefits paid to the former RDP.       

Therefore, a dissolution of registered domestic partnership cannot provide a Reduction or Separate Benefit Award.       

Deduction awards paid to a former RDP or a former RDP’s beneficiary must terminate upon the member’s death.      

A former RDP cannot continue to receive Deduction Award benefits after a PERS member’s death. They can, however, receive death benefits as a beneficiary — either as the member’s designated beneficiary or as required by court order. Benefits paid to a beneficiary are taxable to the recipient.      

A former RDP can be awarded a Tier One or Tier Two separate account, but PERS cannot create the former RDP’s separate account until immediately prior to distribution. Distribution to the former RDP cannot occur until the member withdraws, retires or dies. If the member withdraws, the former RDP must immediately withdraw, and any awarded employer-matching funds will be forfeited. If the member retires, the former RDP must immediately retire under the Total Lump Sum option. Annuity or installment benefit options are not allowed because the member is responsible for the taxes and the timeline for these types of benefit payments could exceed the member’s lifetime. If the member dies, the former RDP must take immediate lump sum distribution either as a withdrawal or as a retirement based on the member’s retirement eligibility at death. If a former RDP with a separate account award dies prior to distribution, the former RDP’s beneficiary’s distribution will be paid in a one-time lump sum death benefit when the member takes distribution or dies.      

Dissolution of a registered domestic partnership does not allow a member who elected a Survivorship Increase option (2A, L2A, 3A, or L3A) to change to a higher-paying option (aka “pop up”) due to dissolution of the partnership. If the member’s RDP or former RDP dies before them, the member can pop up due to death.      

Dissolution of a registered domestic partnership does not allow a survivorship option beneficiary change.      

Any award type that would be applicable if the court order were a dissolution of marriage also is available for a legal separation. If all the criteria are met, a legal separation order also can allow a post-retirement beneficiary change for a member who elected a survivorship option at retirement. (Read the Reduction and Deduction Award section.)     

It is important to note that legal separations do not terminate marital rights. Any document submitted by the member that requires spousal consent is required to be signed by the member’s spouse from whom the member is legally separated — unless the separation order specifically addresses and exempts the document and the elements within the document from the spousal consent requirement, incorporating PERS' Legal Separation Spousal Consent Waiver form as a labeled and referenced court order exhibit.      

An example would be if a member with a legal separation order submits an application for retirement. The member’s spouse would be required to sign in front of a notary that they consent to the benefit option and beneficiary selected by the member — unless the separation order specifically states that the member may submit a retirement application and that spousal consent is not required for the member’s option or beneficiary selection.      

Legal separation does not allow a member who elected a Survivorship Increase option (2A, L2A, 3A, or L3A) to change to a higher-paying option (aka “pop up”) due to legal separation. If the member’s spouse, from whom the member is legally separated, dies before the member, the member can pop up due to death.     

Member retirement options

A member may select any retirement benefit option* unless their court order or divorce forms restrict the member to a specific option.      

Read the Tier One/Tier Two and Individual Account Program (IAP) Preretirement Guide for an explanation of the benefit options that are available and a description of how they work.       

Read the subsections below for retirement option information by award type.      

Separate Account awards

If an alternate payee (AP)/former registered domestic partner (RDP) has been awarded a separate account, typically there are no retirement option* restrictions on the member.      

Reduction and Deduction awards

Regardless of whether the member is free to select any option* or is restricted to a particular option, the alternate payee (AP)/former registered domestic partner (RDP) will receive a portion of the member’s benefit — and possibly the member’s beneficiary’s benefit — for as long as it is paid, unless the court order provides alternate direction. If a member receives a lump-sum benefit, the AP/former RDP also will receive a lump-sum benefit. If the member receives a monthly benefit, the AP/former RDP also will receive a monthly benefit payment.      

Beneficiary designations      

The designation of primary beneficiary for joint and survivor annuity options is made at the time the member applies for retirement. The court order may require the AP/former RDP to be named as the primary beneficiary, so the AP/former RDP will continue to receive their share for life. Any remaining share can go to the member’s secondary beneficiary, but this payment will stop upon the AP’s/former RDP’s death.      

When a member is free to name anyone as primary beneficiary and does not name the AP/former RDP, all payments to the AP/former RDP cease with the member or primary beneficiary’s death, as directed by court order.      

Separate Benefit awards

If an AP retires under a Separate Benefit award, the member is typically released from any retirement option* restrictions in the court order.      

*If you are legally separated, read the “Legal separations” section for additional information regarding member benefit options.       

Alternate payee/former registered domestic partner retirement options

Alternate payees (AP) may or may not have retirement options depending on the type of award provided for in the court order. Former registered domestic partners (RDP) do not have retirement options.      

Reduction or Deduction Award APs/former RDPs

APs/former RDPs of a Reduction or Deduction Award do not have any retirement option choices.      

The AP/former RDP will receive a portion of the member’s benefit — and possibly the member’s beneficiary’s benefit — for as long as it is paid— unless the court order provides alternate direction.      

If a member receives a lump-sum benefit, the AP/former RDP also will receive a lump-sum benefit.      

If the member receives a monthly benefit, the AP/former RDP also will receive a monthly benefit payment.      

The AP/former RDP benefits will begin automatically when the member’s benefits begin; the AP/former RDP does not submit an application to initiate benefits.
      

Separate Account or Separate Benefit Award APs/former RDPs

APs of a Separate Account or Separate Benefit Award will be able to select one of five benefit payment options independent of the member’s choice. The law does not allow joint and survivor annuity options for APs. Benefits will be annuitized based on the age of the AP to determine payment amounts. Former RDPs of a Separate Account Award must select the Total Lump Sum option. The AP/former RDP must submit the Alternate Payee Tier One/Tier Two Benefit Application form to initiate benefits.       

An AP’s benefit based on a Separate Benefit Award will be determined using the member’s highest calculation method. The member’s benefit is calculated, and then the AP award is applied to determine the AP amount. The AP’s benefit is then re-annuitized based on the AP’s lifetime.       

An AP’s/former RDP’s benefit based on a Separate Account Award will be determined using the Money Match calculation method. The AP’s account balance at the AP’s effective benefit date, plus employer-matching funds (if awarded), are annuitized based on the AP’s lifetime and benefit option selection.       

APs/former RDPs are not allowed to cancel benefits later than the day before the issue date of their first payment.      

A court order may place a restriction on an AP’s option selection. Barring restrictions, the benefit options available to APs are:      

• Option 1 — This is a straight life benefit. Monthly benefits are paid for the AP’s lifetime. No benefit of any kind is payable to anyone after the death of the AP.
• Refund Annuity — This benefit is paid for the AP’s lifetime. The account balance at the time the AP begins receiving benefits will be reduced each month by the amount of the “annuity” portion of the AP’s monthly benefit. Upon the death of the AP, the AP’s designated beneficiary will receive a lump-sum payment of any remaining account balance. Under this option, the AP’s beneficiary designation may be changed at any time. A beneficiary need not be a person; it can be an estate, a charity, or a trust. Usually, after nine to 12 years, no remaining account balance is available to pay to a beneficiary.
• 15-year Certain — This benefit is payable for the AP’s lifetime. If the AP dies before receiving 180 payments, the remainder of the 180 payments will be paid monthly to the AP’s beneficiary. Once 180 payments have been made, all beneficiary benefits will stop. Under this option, the AP’s beneficiary designation may be changed at any time. A beneficiary need not be a person; it can be an estate, a charity, or a trust.
• Lump-sum Option 1 — Under this option, the AP’s account balance is paid either as a one-time, lump-sum payment or in up to five annual lump-sum installments. The AP also will receive a monthly pension benefit from employer funds that were awarded in the court order. The lump-sum payment(s) may be rolled over to another qualified plan or a traditional or Roth individual retirement account (IRA). This option is not available for Separate Account awards if employer funds were not awarded.
• Total Lump Sum — Under this option, the AP’s account balance and employer-matching funds, if awarded, are paid either as a one-time, lump-sum payment or in up to five annual lump-sum installments. The lump-sum payment(s) may be rolled over to another qualified plan or a traditional or Roth IRA. There is no monthly benefit under this option, and there are no cost-of-living increases.

A court order containing an award of PERS benefits will not be administered until the Alternate Payee Information Verification form is completed by the alternate payee (AP)/former registered domestic partner (RDP) and received by PERS, accompanied by a copy of a document verifying the AP’s/former RDP’s correct Social Security number. The purpose of the form and Social Security documentation is to verify the AP’s/former RDP’s mailing address, date of birth, and Social Security number.       

To expedite court order processing, PERS encourages APs/former RDPs to be proactive in submitting the verification form to PERS.      

If the verification form is not on file, PERS will mail the form to the AP’s or former RDP’s presumed address. If the AP or former RDP address provided in the court order is no longer valid, the parties should contact PERS and provide the correct AP or former RDP address.      

If the AP or former RDP is a Tier One, Tier Two, or Oregon Public Service Retirement Plan (OPSRP) member in their own right, the Alternate Payee Information Verification form requirement is waived.      

Increases to AP/former RDP benefits for Tier One and Tier Two

Increases to benefits, such as cost-of-living adjustments (COLA) and tax remedy increases, currently in effect are not due the AP/former RDP until they are due and payable to the member. If an increase never becomes due and payable to the associated member, then the AP/former RDP will never receive an increase.       

Set monthly dollar awards are not subject to increases.      

Member cost/post-tax dollars

Any after-tax contribution is referred to as “member cost” and is reported as employee contributions on tax form 1099-R. Member cost is allocated between the member and AP based on the award proportionate to either the account balance or benefit awarded to each.