Marital Settlement Agreements

For decades OPM has required that when a Former Spouse submits a certified copy of a FERS Court Order Acceptable for Processing ("COAP") for approval, they must also submit a certified copy of the Judgment of Absolute Divorce ("JAD") and a copy of the Marital Settlement Agreement ("MSA") by whatever name it may be called, if there is one.

I have a client pushing back on providing the MSA, even a redacted one, for privacy reasons. So I opened my CFR website and have spent HOURS looking for the regulation that required that the MSA be provided. I cannot find it.  I contacted a few other COAP preparers that send in the MSA like me, but they don't know the source of that mandate, or any other Plan Administrators that want a certified copy of the JAD, let alone the MSA.

Yes, I know that many Plans permit the transfer of pension and/or retirement benefits that are based on a "legal separation" where there is no JAD and will not be until the expiration of some period of time in the future (ex: South Carolina), so the Plan must base its decision on the MSA.  But that's not my situation.  

Ideas?  Thanks, 

David

CFR?  Really?  You are stating/suggesting that the (missing) guidance is a regulation? 

Just a guess, I would expect it to be an administrative procedure.  In writing.

David Rigby, for many States’ and political subdivisions’ employee-benefit plans, an agency or instrumentality that administers a plan might be permitted or mandated to make plan-administration procedures by making and publishing a rule or regulation under an administrative-procedure act and other law that governs the government’s other executive agencies. So, writings an ERISA-governed plan’s administrator might call a claims procedure or a QDRO (or QCMSO) procedure might, if made for a governmental plan, be compiled in the State or local government’s code for rules and regulations.

For some plans for Federal government employees, rules for a “Court order acceptable for processing” are compiled in the Code of Federal Regulations at title 5, chapter I, subchapter B, part 838 (Court Orders Affecting Retirement Benefits)—5 C.F.R. §§ 838.103 to 838.1121.

DSG, here’s what I see on a quick surface reading. (I’ve never had the United States as my client, and so have never advised anyone about any Federal governmental plan.)

A part 838 section states: “Claimants are responsible for—(a) Filing a certified copy of court orders and all other required supporting information with OPM[.]” 5 C.F.R. § 838.123(a), https://www.ecfr.gov/current/title-5/part-838/section-838.123#p-838.123(a) (emphasis added).

Some might interpret that sentence to grant OPM some discretionary authority to say what “supporting information” OPM reasonably, or at least not capriciously, “require[s]”.

One might imagine OPM could require a settlement agreement if the order an applicant seeks to get treated as a COAP merges in or “incorporates by reference” the settlement agreement. And one might imagine OPM could require a settlement agreement if the order an applicant seeks to get treated as a COAP refers to the settlement agreement and the court’s order would or might be incomplete without the settlement agreement.

A CSRS/FERS Application for Court-Ordered Benefits for Former Spouse [https://www.opm.gov/forms/pdf_fill/sf3119.pdf] suggests OPM’s reviews of domestic-relations orders might be based on such an interpretation:

“Supporting documentation must be submitted with this application.  . . . . Additionally, all documents referenced in the court orders must be included as well as . . . divorce decrees[.] Divorce decrees include . . . the Property/Marital Settlement Agreement[.]  . . . .” (emphasis added).

Beyond that, one might imagine OPM uses some beyond-the-rule practices.

To help you consider whether OPM properly can require a settlement agreement not needed to make the State court’s order complete, ask yourself this:

What documents would an applicant furnish had the divorcing litigants never agreed on a settlement and instead the State court decided the allocations of property between the former spouses?

If your client is the former spouse, strongly prefers not to furnish the settlement agreement, and you believe OPM ought not to need the settlement agreement to decide that the State court’s order is a COAP (particularly if the order does not refer to the settlement agreement):

Evaluate whether you as your client’s representative might submit an application that includes the State court’s order but omits the settlement agreement. If OPM finds the order is acceptable, your client will have a welcome answer. If OPM finds the order not acceptable, OPM must “provide the specific reason(s) for disapproving the application.” That might help you learn why OPM thinks a settlement agreement is needed. Or, if OPM’s finding (after all layers of within-the-agency review are exhausted) is capricious, that might set the stage for your client’s action for a Federal court to vacate OPM’s decision.

This is not advice to anyone.

TO: 

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

Peter: 

Thanks for your comments.  Let me tell you what I have learned from various sources: 

1.  You and one of my Maryland colleagues, using simple logic (whatever that is) suggested that the Marital Settlement Agreement (MSA), if there is one, is always incorporated into the Judgment of Absolute Divorce (JAD) that you must send to OPM so they will have complete JAD. My grandkids would say something like "DUH?"

2.  You and I both discovered  5 C.F.R. § 838.123(a) - https://www.law.cornell.edu/cfr/text/5/838.123 and realized that "other required supporting information" could easily deemed to include the MSA. 

3.  Everybody said that they had NEVER been contacted by OPM about the MSA and none of us believed they actually read it. 

4. Everybody was aware of 5 CFR 838.101(a)(2):

          "(2) In executing court orders under this part, OPM must honor the clear instructions of the court.   Instructions must be specific and unambiguous.   OPM will not supply missing provisions,  interpret ambiguous language, or clarify the court's  intent by researching individual State laws.  In carrying out the court's  instructions, OPM performs purely ministerial actions in accordance with these regulations. Disagreement between the parties concerning the validity or the provisions of any court order must be resolved by the court."  (Emphasis supplied.)

5.  My client was concerned about giving so much information to OPM, even if it was heavily redacted, given that in 2015 OPM suffered a data breach that compromised sensitive, personal, and background investigation files of approximately 21.5 to 22.1 million people.

6.  One of my colleagues pointed out the DFAS also requires a copy of the MSA in connection a Military Retired Pay Division Order. 

7 . Nobody could remember any other ERISA Plan Administrator every asking for a copy of the MSA. See ESBA Advisory Opinion 1999-13A and  Blue v. UAL Corp., 160 F.3d 383, 385 (7th Cir. 1998) - https://scholar.google.com/scholar_case?case=10750404539478630173&q=blue+v.+ual&hl=en&as_sdt=20000003 . 

8.  You alone led me to SF-3119 - Application for Court-Ordered Benefits for Former Spouse, with the following language: 

           "Supporting documentation must be submitted with this application. This includes an original or certified copy of the court order with the judge's signature that meets all requirements for state certification of court orders. Additionally, all documents referenced in the court orders must be included as well as marriage certificates, divorce decrees, and/or death certificates for additional marriages (see Section C). Divorce decrees include, but are not limited to, the Property/Marital Settlement Agreement, Divorce Decree, or Qualified Domestic Relations Order, etc. If you have already submitted a certified copy of the court order, you do not need to submit it again."  (Emphasis supplied). 

I will update is I receive any other information.  Thanks. 

David Goldberg