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The benefits that a former spouse collects will have no effect on the


Guest KCW
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At http://retireplan.about.com/library/weekly...a_divorce_a.htm

in an article Titled "What you need to know about divorce and retirement benefits" the moderator, Harmon W.McKinney,Jr., wrote:

"When a man or woman divorces and doesn't remarry, he or she can receive benefits from a former spouse if they were married at least ten years and you have been divorced two years. The benefits that a former spouse collects will have no effect on the amount the wage earner or his or her dependants or new spouse will collect. Making the wrong decisions about dividing up retirement benefits can cause serious financial difficulties, tax burdens, and/or fines."

Anybody have any idea what he is talking about?

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No. Have you asked him? (Click on the link to his name.)

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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I think he is referring to the right of an ex spouse to collect SS benefits based upon a former spouse's earnings as long as the parties were married for at least 10 years and the ex spouse has not remarried. The benefits are paid by SS not by the working spouse. However, ss benefits of a wage earner are not subject to division upon divorce because the benefits are not alienable so I dont understand what his last sentence is referring to (unless it is employer provided benefits). I dont understand what is his reference to tax burdens and fines (other than 10% prematuare distribution tax from IRAs) becuase almost all benefits can be transferred without adverse taxation under qualified plans, 403(B) plans, 457 plans, IRAs, nonqualified plans and stock options programs.

mjb

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I did send a message to Mr. McKinney asking him what he meant.

I'll post the gist of his reply if I get one.

Social Security sounds like the answer.

Regarding his warning, I would say that the adverse consequences might include unfavorable tax consequences,* excessive legal fees, delays, and unfavorable division formulas (especially division formulas for DB benefits).

*Unfavorable tax consequences for the alternate payee from the DRO failing to specify periodic payments or a rollover instead of letting a plan's lump sum default apply.

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